Jones Journal - Spring 2014
The magazine of the Jones Graduate School of Business at Rice University.
spr ing 201 4 CHANGING with executive education page 22 Page 10 Entrepreneurship Chris Campbell â€™01 solves coffee-drinking dilemmas with Chameleon Cold-Brew Page 30 page 26 The Price is Right ... Or Not From Military to MBA One professor's research analyzing a firm's perspective on pricing, sales practices and profits The challenging transition from veteran back to civilian r i c e u n i v e r s i t y, J o n e s G r a d u a t e Sc h oo l o f B u s i n e s s The Starter The Starter From the Dean Spring semester is now complete and with it comes the close of another academic year. This year, there is much to celebrate, as we’ve begun implementing our new path forward for the Jones School. It’s a refined strategy that builds on our strengths in core business disciplines that enable us to simultaneously create global impact and to further embrace the dynamic powerhouse of a city that we call home. Our investments in energy, health care and entrepreneurship reflect Houston’s assets, and by deepening our commitment to those strengths and our relationship to this international city, we better prepare our students for leadership success in the competitive global marketplace. Driving this strategy, the deans’ suite now includes: K. Ramesh Barbara Ostdiek, Brent Smith and Rachel Fleck. Faculty leadership also is crucial for the revised strategy. Under the leadership of Professor of Entrepreneurship and Psychology Al Napier and through his partnership with Professor of Entrepreneurship Ed Williams, we already have a strong reputation in entrepreneurship. The same model of faculty leadership will be used to enhance our presence in energy and health care. J. Hugh Liedtke Professor of Marketing Vikas Mittal will lead the energy industry initiative, and Associate Professor of Strategic Management Prashant Kale will lead our health care industry initiative. Professor of Marketing Amit Pazgal also has been named academic director of operations management. • We highlight our successes in attracting top talent, such as highly qualified military veterans, whose impact on our school is unparalleled and whose influence on business will be even more exciting. • And we feature the big ideas of Professor Pazgal, whose lifetime of research not only impacts his field, but also transforms how firms conduct their business. Spring is a time of change, transformation and growth, and I marvel at the continuous growth, developing legacy and increased reputation of the Jones School that has taken place during my tenure as dean. As I reflect on the school’s accomplishments in knowledge creation and value-added business education, the big ideas of our faculty and the quality of the educational programs, it seems fitting that I too make room for change and growth. Relatively few deans remain in office more than seven to eight years, and I have been privileged and honored to serve as dean for nine. In 2016, as I enter my eleventh year, the school will begin a search process for a new dean. Until that time, I remain committed to further developing the Jones School as a premier business school creating value for our stakeholders. And I hope, on the dawn of the school’s 40th anniversary, you will join me in celebrating the many accomplishments and successes we’ve achieved together. • The magazine includes stories about alumni and students who’ve jumped into the daunting arena of entrepreneurship, here in Texas and as far away as Dubai and London. cover story showcases Rice Executive Education’s impact on developing lifelong talent – through educating Houston’s current business leaders, whose fields range from energy and health care to education and more. 22 Growing Houston Business Rice University Executive Education and its expanding reach in Houston and beyond This issue of the Jones Journal highlights the impact our students, faculty and alumni have already made in these fields that differentiate our school: • The Features 26 Bill Glick Dean + H. Joe Nelson III Professor of Management Jesse H. Jones Graduate School of Business Rice University I 713-348-5928 I firstname.lastname@example.org From Military to MBA The challenging transition from veteran back to civilian 30 The Price is Right ... Or Not One professor's research analyzing a firm's perspective on pricing, sales practices and profits 26 SPRING 2014 JONES JOURNAL // 1 The Starter In this Issue Dean + H. Joe Nelson III Professor of Management Bill Glick Executive Director of Marketing Communications Mark Rudkin ’08 The Rundown A round-up of the most exciting news from the Jones School and beyond. Senior Writer M. Yvonne Taylor Creative Director Kevin Palmer Photo by Jeff Fitlow Editor Weezie Mackey 1 Graphic Designer Shatha Hussein Web Manager Jon-Paul Estrada Web Content Specialist Tricia Delone Junior Front End Web Designer Wil Dorsey 11 3 The Rundown 18 Your Career 8 Business Lunch 20 Hire Ed 9 5 Things 21 Ask the Alumni 10 Entrepreneurship 34 Community 14 The Launch 36 Perspectives 15 Places of Business 39 Events Calendar 16 Ask the Experts 40 JGSB Online Jones Journal is published semiannually for alumni and friends by the Jesse H. Jones Graduate School of Business. Current and back issues of the magazine are available online at business.rice.edu/JJ. Change of Address? New job? Update the online directory with your new contact information or send us your class notes at business.rice.edu/alumni. Comments or Questions? We’d love to hear your thoughts about the Jones Journal. Send an e-mail to Mark Rudkin, executive director of marketing communications, email@example.com. business.rice.edu 2 // JONES JOURNAL SPRING 2014 Marketing Coordinator Dolores Thacker Contributing Writers Bill Arnold Amy Burroughs Susan Chadwick Erik Dane Sean Ferguson ’01 Shatha Hussein Amira Jensen Weezie Mackey Contributing Photographers Alex Barber Troy Fields Jeff Fitlow Gibson Hall Michael Muller Printing Chas. P. Young Co. Advisory Board Alex Butler Josh DeMott Shea George Deanna Golden Jenn Hartley Sue Hochman Amber Ivins Michelle Kaltenbach James Lenz '07 Salomon Medina Sue Oldham Joe Soto Rice Cube Club honors Nelson Mandela In February, Rice University's BioScience Research Collaborative (BRC) building featured a Rubik's Cube mosaic of Nelson Mandela in honor of Black History Month. The mosaic, approximately 3.75 feet by 5.5 feet, used 600 cube puzzles borrowed from the makers of the Rubik's Cube and was created by members of the Rice Cube Club. Installed in Rice Public Art’s pop-up gallery located in the BRC's first-floor lobby, the mosaic was the brainchild of Cory Thigpen '15, a Jones School MBA student and president of the Rice Cube Club. He wanted to honor the former South African president and Nobel Peace Prize winner, who died Dec. 5. To see the finished product, flip to the last page. SPRING 2014 JONES JOURNAL // 3 The Rundown The Rundown 2 3 4 TEDxHouston at Rice: Lessons in 'The Other Things' The more than 650 people who attended TEDxHouston 2013 on the Rice campus Oct. 12 got to hear 29 local thinkers and doers — including some Rice alumni and faculty — give "the talks of their lives" (aka "TED talks") in 12 minutes or less. The power and potential of virtual reality was the topic of Jan Goetgeluk's talk. The 2010 Rice MBA is founder and CEO of Virtuix and the developer of the Virtuix Omni, the first virtual reality interface to move freely and naturally JGSB team wins big at 2014 RBPC in video games and virtual worlds. Showcased onstage, the Omni is a treadmill-like platform used to simulate the motion of walking and that allows for 360-degree movement. The player is fully enclosed within a ring that works with a safety harness to absorb the player's weight. It has wide-ranging applications in the military, education, health care and business sectors. "In short, virtual reality will change the way we think, live, work and exercise," Goetgeluk said. "It will be front and center in our daily lives fairly soon." Dorothy Ables, Fran Vallejo ’96, Catherine Clark Mosbacher and Elizabeth Killinger participate in the Visionary Leadership panel at the Women in Leadership Conference. Photo by Jeff Fitlow. Top female execs share winning leadership practices, traits Hosted by the Rice chapter of the National Association of Women MBAs (NAWMBA), the 14th annual Women in Leadership Conference, titled “A View from the Top,” sold out with 260 registrants. The conference was co-chaired by Krishna Desai ’14 and Sima Jani ’14 and featured two keynote addresses, an opening panel session on visionary leadership and four breakout panels. Delivering the morning keynote address, Angela Blanchard, president and CEO of Neighborhood Centers, Inc., shared the principles of what she calls “figure-it-out” leadership. “Do what you can, with what you have, where you are right now,” she advised. “Approach a project as if it were a blank sheet of paper.” 5 Photo by Gibson Hall 4 // JONES JOURNAL SPRING 2014 Rice University's own team, A-76 Technologies, came in second at the Rice Business Plan Competition on April 10-12. The company provides highly effective corrosion inhibitors and lubricants for metals used in a variety of industrial applications. The team is initially targeting customers in the oil and gas industry with plans for future expansion in transportation, marine, utilities and infrastructure. Made up of 2014 Rice MBAs Lauren Thompson (CEO), Tim Aramil (COO), Brenden Garrett (CMO), Eduardo Garza (CFO) and Cameron Hatch, the team walked away with more than $550,000 in investment, cash and prizes of the record-high nearly $3 million awarded at the world's richest and largest graduate student startup competition. Jones School staff named Whitaker Scholar Ben Guest, associate director of admissions at the Jones Graduate School of Business, was awarded the Whitaker Scholarship. He started in August of 2013 and will be funded for his twoyear MBA for Professionals program. Named for the late Dr. Gilbert Whitaker — former dean of the Jones School — the Whitaker Scholars Program was designed “to help Rice staff who have demonstrated an outstanding managerial contribution and potential for even greater achievement” in their pursuit of a superior business education. Guest’s impressive track record started in the mail room at the Jones School and moved up from there. In the last year, he received a Centennial Star, awarded by Rice for collaborative and innovative efforts on behalf of the university, and the Dean’s Award for exemplary service to the Jones School. SPRING 2014 JONES JOURNAL // 5 The Rundown The Rundown 6 9 Rice MBA Programs ranked and recognized Wright Fund students’ winning ways MBA for Executives rises to top The Rice MBA for Executives (EMBA) program is still on top in the state and region, according to new rankings from the Financial Times. For the fourth year in a row, the EMBA program — designed for upperlevel managers — was ranked No. 1 in Texas and the Southwest. It was ranked No. 8 in the U.S. (up from No. 11 last year) and 30 globally, up seven spots from 46 in 2012. In the specialty categories, the Rice EMBA program was also recognized as No. 1 globally in entrepreneurship, as rated by 2010 graduates. REEP recognized for innovation Rice University Education Entrepreneurship Program (REEP) was announced as the 2013 winner of the MBA Roundtable Innovator Award. The award recognized the Jones School for MBA curricular innovation with the delivery of REEP, a highly selective program that combines an elite business school education with a K-12 leadership and entrepreneurship practicum. The goal is to equip campus leaders with leadership principles and management tools. 7 Fleck named Assistant Dean Following a nationwide search, the Jones School named Rachel Fleck assistant dean of external relations. She was previously the director of development and interim external relations team lead for the Jones School. Emerging as the top candidate with enthusiastic support from the search committee and Jones School deans, her role as assistant dean began Jan. 1. Rachel led the external relations team through the successful completion of the $65 million Centennial Campaign and the school’s fundraising efforts on important initiatives, such as relaunching the Master of Accounting degree program, initiating the Military Scholars Program, supporting the Crownover Scholars Program and overseeing management of the Jones Fund. “Her record of success at the Jones School has been consistent and remarkable,” said Jay Collins, Jones School Council of Overseers chairman. “I am confident our development objectives will continue to progress under her leadership.” 6 // JONES JOURNAL SPRING 2014 8 Rebellion Photonics wins ‘Startup of the Year’ Allison Lami Sawyer ’10, cofounder of Rebellion Photonics, a Houston-based startup company founded with Robert Kester, a Rice Bioengineering Ph.D., won the first ever Wall Street Journal "Startup of the Year" competition last fall. Rebellion’s camera is the world's only real-time chemical imaging camera for continuous monitoring of rigs and refineries. The technology can be used for a variety of groundbreaking chemical imaging products in markets such as defense, biological research, food contamination detection, rig/refinery safety, quality control and forensics. Rebellion Photonics competed as graduate students at the 2010 Rice Business Plan Competition and finished as runner-up, winning over $100,000 in seed funding and then went on to receive funding from the Texas Emerging Technology Fund, a fund that supports promising early-stage companies in Texas. Congratulations go to CFA Institute Research Challenge (IRC) team of Wright Fund students — Aries Arifien ’14, Nael Ashour ’14, Jaime Bullon ’14 and Jane Wang ’14 — on winning the Southwest U.S. finals at the Texas Investment Portfolio Symposium (TIPS) conference hosted at SMU in February. Scoring is based evenly on presentation and research report. The eight finalist teams who presented at the TIPS conference were selected from a preliminary field of 24 teams (the second largest region in the world) based on a written research report. The win earned the team a place at the Americas Regionals in Denver, where they placed second overall out of 48 teams from North and South America. 11 10 Jan Goetgeluk speaks at TEDxHouston. Photo by Alex Barber. Alum takes bite out of Shark Tank Shortly after his TEDxHouston appearance, Virtuix CEO Jan Goetgeluk ’10 showed up on the television program Shark Tank to pitch the Omni, a virtual reality treadmill. ABC’s business-themed reality series features the sharks — tough, self-made, multi-millionaire and billionaire tycoons — who give budding entrepreneurs the chance to secure business deals that could make them millionaires. At the end of April, as the Omni neared its commercial launch, Virtuix completed a $3 million seed investment round with investors including Mark Cuban (Radical Investments), Maveron, Tekton Ventures (Partech), Scout Ventures, The Houston Angel Network and a series of other VC firms. Current student publishes first novel As of April 1, Mike Freedman ’14, president of VIBA and architect of this past fall’s Veteran’s Experience, added published author to his list of accomplishments. The former Green Beret penned the satirical novel School Board, about high school senior Tucker “Catfish” Davis, who attempts to be elected to the local school board. Armed with idealism and an ever-present fedora, he enlists his school buddies, an indicted Louisiana governor and a gay journalist with political ambitions to join him in opposing a candidate backed by an Enron-esque oil services company. Along with several off-campus appearances in April, a book signing and reception at Rice celebrated Freedman’s debut work. SPRING 2014 JONES JOURNAL // 7 Get in The Know with these 5 Things Business Lunch: Bloom 1 Lumo Lift Hong Kong is one of the great cities in terms of world-class cuisines. Unfortunately, because of the high cost of the real estate, the implicit “rent tax” can cause high-end cuisine to be very pricey. To maximize revenues, many restaurants offer set menus at more reasonable prices. On high market days such as Valentine’s Day, almost all restaurants offer a set menu. This year, my wife Jolene and I went to Bloom in Lan Kwai Fung (LKF), the unofficial expat district of Hong Kong. We didn't seek out Bloom; it was just one of the few places with seats left available on Valentine's Day. Bloom is the restaurant level of the LILY & BLOOM two-floor compact. Bloom tries to deliver an atmosphere reminiscent of New York or Chicago at their peak in the early 20th century. This is until you hear the light bass bumping from Lily upstairs. Bloom offered a special Valentine’s Day five-course set menu for HK$495 (~$65 USD) per person, which is very reasonable by Hong Kong standards. Unbeknownst to us, the set menu also had an accompanying cocktail menu for each course for an additional HK$200 (~$25 USD) ... JACKPOT! Usually, I am not a fan of restaurant cocktails. In most cases, they are uncreative, sugary beverages with too many ingredients and poor quality alcohol. Surprisingly though, Bloom went the extra mile with the cocktails. By themselves, these cocktails were amazing, some of the best I have ever had. However, when paired with the accompanying entrées, the combination unleashed my taste buds. The first pairing was a starter of Champagne Marinated Caviar Blini paired with a Chester’s Cup. It was good; 8 // JONES JOURNAL SPRING 2014 Lumo Lift is a wearable sensor that syncs with an iPhone app to remind the wearer to sit or stand up straight. The sensor vibrates when your posture is hunched, prompting you to lift your head and bring your shoulders back into a more confident stance. The app tracks your progress and even counts your steps, calories and mileage to encourage a more active lifestyle. lumobodytech.com Photo courtesy of Bloom nothing spectacular, but the Chester’s Cup was a flavorful complement. The next course was a Petite Fruite de Mare, a combination of an amaebi shrimp cocktail and a seasonal oyster on the half shell. The sweet freshness of the shrimp and subtle taste of the sea were a perfect complement to the Bloody Sandia’s 5 peppercorn tequila, pressed watermelon, sea salt, bell pepper shrub, and fresh lemon pastis. The last small course was another protein-oriented delicacy called the Charcuterie Tasting, a trio of iberico ham, palacio chorizo and house-smoked salmon. This was paired with the Queen’s Affair, whose signature ingredient is a rosebud and pistachio-infused chase of British gin. Never a fan of gin, I realized I had never had the right one. After three cocktails and three petite starters, I was waiting in anticipation for the main course. There were three choices, including a Lobster Risotto paired with the El Jimador featuring a reposado tequila. The other two choices were seared lamb chops with a cauliflower risotto and steak frites, each accompanied by a Chet Baker, an ode to the great American jazz trumpeter. I decided to have the lobster risotto and convinced my wife to have seared lamb chops. The black truffle and saffron butter made for a rich and hearty 2 Skillshare Location: Hotel LKF, Lan Kwai Fong, Hong Kong Cuisine: Western/International Cost: $$ (by HK standards) After the Party: Drinks at Lily After the After Party: Dancing at Tonic a few doors down Good to Know: Less than a quarter of a mile away from Happy Feet, foot massage joint. Open until 2:00am risotto, while the butternut puree and cauliflower risotto were an amazing complement to the seared lamb chops. Four courses down, barely room for a fifth until they brought out the Bloom Cinnamon Bun with the Celtic Flip. Heavy heavy! Guinness with gin and a cinnamon bun, who knew these two could go together so well? Bloom was an amazing evening, packed full of value. Thanks to the set menu, we were able to enjoy a five-course meal with accompanying drinks for only about ninety U.S. bucks. It reminded me of the sophisticated culinary value that I had become accustomed to in the underrated, yet surprisingly cosmopolitan, Houston, Texas. — Sean Ferguson '01 5 IFTTT IFTTT stands for “If this then that.” It’s an app that allows you to automate and simplify everyday tasks by using “if this then that” statements. For example, you can create “recipes” using other apps and services such as “If I post a photo to Instagram, then save it to my Dropbox.” A recently added GPS feature allows for locationbased recipes, such as receiving a reminder to work out after eating at your favorite burger joint. ifttt.com Skillshare offers online classes for anything from calligraphy to audio mixing. Professionals in their field create video courses teaching skills that students can watch and learn from at their own pace. Classes are offered for as little as $15. skillshare.com 3 Plated Plated is a service that combines the enjoyment of cooking with the convenience of doorstep delivery. Fresh, perfectly portioned local ingredients and a recipe for a gourmet meal are included in the delivered package. Cut out the shopping list and get right to the fun part. plated.com 4 Coin Coin allows the user to consolidate all of his credit cards onto a single card-like device, making wallets packed with multiple cards a thing of the past. Cards are loaded onto the device through the Coin app. A digital push button display allows the user to choose the card needed, and then Coin is swiped like a normal credit card. onlycoin.com SPRING 2014 JONES JOURNAL // 9 Entrepreneurship “I didn’t want to leave Austin; I had to figure something out,” Campbell said. “I either had to come to terms with never progressing in my career or find something else to do.” He had considered the alternative of starting his own business in 2009 when he met opportunity at a 4th of July block party in his neighborhood. Steven Williams, a coffee slinger in Austin for years, had recently opened the 24-hour coffee shop Bennu with his wife Stephanie and was looking for the next step in his career, as well. After a year of brainstorming about how to capitalize on their combined skills, the business partners came up with the hot concept of Chameleon Cold-Brew. Chameleon Cold-Brew solves every coffee drinker’s dilemma. The highly concentrated coffee drink is sold by the bottle, with room in each cup for a unique caffeinated experience. It can be diluted and poured over ice for a summer drink, sipped as an afternoon pick-me-up or even heated for a morning cup of joe. At its core, the versatile drink is Campbell’s and Williams’ idea of the perfect coffee product. “We believe we cracked the code and found a better way of making coffee,” Campbell said. Photos by Michael Muller Chameleon-like alum finds answer in change Chris Campbell ’01 solves coffee-drinking dilemmas Chris Campbell put his problem-solving skills to use as a consultant after graduating from the Jones School’s MBA program in 2001. But after some time working at the Austin office of PricewaterhouseCoopers, it became clear that he had a problem of his own; he had to make a strategic move or allow his consulting career to stagnate in Texas. 10 // JONES JOURNAL SPRING 2014 The process of creating what is now Chameleon Cold-Brew was as organic as the Arabica beans that go into every bottle. When Campbell asked what the best-seller at Bennu was, cold-brewed coffee was the answer. A mutual friend, who eventually opted out of the business, brought in a bottle of New Orleans cold-brewed coffee to the shop one day and told them that the stuff was selling despite tasting terrible. The entrepreneurs had found their business. “Steve and I crafted a partnership; he brought the recipe to the table, and I brought the cash and how to take something from one scale to a different scale,” Campbell said. Although Williams had been selling his cold-brewed coffee at his shop for years, taking that same recipe, producing it at a larger scale, bottling, labeling and meeting FDA compliance proved to be a different beast. With a mix of research and meeting the right people at the right time, Campbell said, they had a sellable product and launched in 2011. Around the same time Chameleon Cold-Brew was hitting the shelves, the Austin-based coffee company Kohana also came out with its cold-brewed concept. Since then there’s been a proliferation of similar products on the market, which for Campbell, only validates their business. CHAMELEON COLD-BREW PEANUT BUTTER CUP: 4 oz of Chameleon ColdBrew, 1 oz skim milk, 2 tsp Nutella, 1 tsp peanut butter. Combine all ingredients in a blender and serve hot or cold. “If there’s a really good idea on trend, you’re not the only one who’s going to have that,” Campbell said. and so it goes. The coffee business, it turns out, is a lot like consulting. One difference between their product and those that have tried to emulate it since is that Campbell believes theirs is the best. The beans are roasted in Austin and brewed in filtered water at a controlled temperature for more than 16 hours. Like most things in life that are worth a wait, what results is an especially smooth and caffeinated beverage. Acids that get released when coffee is brewed in hot water get discarded in the grounds, and two to three times the normal amount of caffeine is extracted in the process. “Every day is different. You’re constantly trying to problem-solve and troubleshoot and find things that work for the consumers,” Campbell said. “Some clients have a challenge, you go in, figure it out and find a solution that works for them. Instead of a client, now I’ve got a couple hundred thousand customers, and I need to address their needs.” “I would have loved to have this product at midnight at the Jones School,” Campbell said. Although others have joined the cold brew race, Chameleon Cold-Brew is the only product with a national footprint, with a presence at natural distributors like Whole Foods, Sprouts and Natural Grocers, as well as Texas favorites H-E-B and Central Market. In April, Target made space for a new Chameleon Cold-Brew display in several of its regions. The company also recently introduced a new line of ready-to-drink bottles in three flavors: Original, Mocha and Vanilla – the last being a personal request from Target that Campbell and his team delivered. The flavored beverages will soon replace Chameleon’s regional options of Indonesian and East African blends. The Indonesian blend was Campbell’s favorite, but it didn’t resonate with their consumers, he said, The addition of Target to Chameleon’s distributor list is an exciting milestone for the company, making this year one poised for considerable growth. When they first got started, Campbell was putting every nickel back into the business. They did a Series A capital raise in November 2012 with Fortitude Capital LLC in Houston – a great partnership that has also been helping them fill back-office support, Campbell said. Last year was spent laying down more foundational work, allowing “things to get interesting in 2014.” “At the end of the day, there’s pride of ownership, pride of craft,” Campbell said. Campbell had a hand in every part of the product’s beginnings, from creating a business plan and pricing models to forecasting and big picture strategies – skills for which he thanks the Jones School. Only time will tell what he brews up next. — Amira Jensen SPRING 2014 JONES JOURNAL // 11 Entrepreneurship Passing the Style Test Andrea Ivey Phillips ’13 blends business savvy with classic style offer at this point,” said Phillips. “I spent months of cold calling and mostly getting answering machines. You might try reaching a buyer for weeks only to find out that they are the buyer for a completely different division in the store. You have to be persistent without being too pushy and you really have to use your intuition.” Phillips credits her experience at the Jones School for many of the skills she has used in launching and growing her business. From identifying her target consumer to assessing whether or not the timing was right to launch a business, she was able to talk through her ideas and concerns with Professor of Entrepreneurship Al Napier. The cultural diversity of the Jones School has the style list also helped Phillips The up-andin the daily tasks it coming designer's requires to make AG favorite brands and Phillips successful. “Being a part of such an tastemakers. international program - Kate Middleton at Rice taught me about - Paule Ka cultural dimensions - Carolina Herrera and how important it - Tory Burch is to understand the culture in the country where you do business,” Phillips said. “It’s so important to me because I’m on the phone with seven different countries every day, and I have to know how a person’s culture impacts their way of doing business, their values, communication style, social beliefs and way of negotiation.” Andrea Phillips styles a model at a photoshoot for her lookbook in London. Photo courtesy of Andrea Phillips. When Andrea Ivey Phillips ’13 began sketching clothes two years ago, she wasn’t quite sure where this creative new hobby would take her. While Phillips was still at the Jones School, the former investment banking analyst combined her business background with her love of fashion to create a plan for AG Phillips, a women’s clothing brand focused on timeless pieces made with high-quality European fabrics. It wasn’t until she moved to Dubai with her husband last summer that she decided to pursue the venture. Dismayed by the inflated pricing and out-of-season styles available of her favorite brands in her new home country, Phillips saw an opportunity to bring her business plan to life. She began sketching dresses, buying fabric and shaping what would become the very first collection in the AG Phillips line. For Phillips, inspiration came not only from what was visually interesting around her, but from what was missing in other 12 // JONES JOURNAL SPRING 2014 brands. “You get a lot of ideas from silhouettes you wish you had in your own wardrobe and then when you’re finding the fabric, those ideas really start to take shape,” Phillips said. Her goal became to fill a void in the women’s clothing market with luxurious, contemporary pieces that would still pass the style test season after season. She invested in computer-aided design software, which allowed her to create more sophisticated sketches, and began designing clothes full time last July. Working with a production facility in Romania, she was able to create prototypes of her first garments to present to fashion buyers. The challenge came with convincing fabric suppliers and fashion buyers to conduct business with a brand new designer. “It takes serious sales skills to get them to take a chance on someone small because they essentially make money on high volume and little risk, neither of which I can Because of her business background, Phillips handles her own marketing and social media strategy and even designed her own logo. “A lot of my marketing classes at Rice focused on taking what you have and being as resourceful as possible,” Phillips said. She’s also able to apply the skills she learned in the investment banking world to her new career. “There are a ton of designers who don’t know the business side of fashion, and it’s very challenging because there are such high up-front costs to getting your foot in the door,” Phillips said. “If you don’t know the business side or the marketing, you can run out of money before your product even arrives on the market.” the global impact of the north american revival REFS November 13, 2014 Janice and Robert McNair Hall Jones Graduate School of Business, Rice University who will win? refs.rice.edu Phillips is now based in London where she will officially launch AG Phillips this summer and continue to grow the brand in one of the epicenters of European fashion. She is also working on her next collection for spring 2015 and is hoping to negotiate a licensing agreement to create a line of accessories in the next year. AG Phillips will be available at agphillips.com and at Tootsies’ Houston and Dallas locations by August. — Shatha Hussein SPRING 2014 JONES JOURNAL // 13 Places of Business The Launch Industry insights from the launch pads of business' newest ventures JJ: How did you find yourself in magazine publishing? nicole vogel publisher, Houstonia magazine Houston native Nicole Vogel is president of SagaCity Media Inc. Founded with her brother Scott Vogel in 2003, SagaCity is the parent company of Seattle Met, Portland Monthly, Aspen Sojourner, Park City Magazine, Vail-Beaver Creek Magazine, and 22 other custom and editorial publications, including its newest Houstonia Magazine which launched in April of 2013. Seattle Met and Portland Monthly are both currently among the top 10 best-selling city magazines in the nation and number one in their respective markets, more popular than all national and regional titles. 14 // JONES JOURNAL SPRING 2014 NV: I had been in media for most of my career. Even during my days in broadcast—at CNN, where I was for six years—I had started a magazine. But I really owe my magazine career to a series of tragedies that befell my family. I won’t go into detail but it was a serious enough situation that my brother and I felt we needed to move to Portland, Oregon immediately— where neither of us had ever lived and where we had no job prospects. Once we arrived, we realized that our new home was the largest city in America without a monthly magazine (owing to the fact that there had been 13 attempts, all failed, since 1980). Given our skill sets—my brother had been a journalist at The New York Times, I had worked on the business side at CNN—we thought we might have a chance to succeed where so many others had failed. And with Portland Monthly recently celebrating its 10th anniversary, I guess you’d have to say that we were right. JJ: Is capturing the personality of a city more market research or hiring local talent who know the city well? NV: Well, both are important ways of knowing a market, and I’d hate to run a magazine without either of them. One of SagaCity’s founding principles is that we do not syndicate content. Whatever the market, all of the journalism is produced locally. Invariably, when companies try to run the show from some corporate office in a far off city, the product tends to be shallow, uninteresting, unfocused and pitched to a privileged few—usually the affluent. We invest our money in these communities, hiring local talent, the kind of people who have a deep knowledge of their cities and can therefore bring something of value to the large demographic of readers who may not be hugely wealthy but still want to know what’s going on in their towns. Our strategy has really been vindicated by experience. In the case of our first magazine, Portland Monthly, Scott and I knew almost no one in the market and almost nothing about the city itself. We needed to develop a deep knowledge, and quickly. And so our first project was to interview every thought leader who would agree to sit down with us, and then ask them for the names of five others whom we absolutely, positively had to meet before launching the magazine. That put us into contact with everyone from artistic directors to the mayor to historians to average folks—a very large number of them potential readers. And in every market we’ve entered since then, we—as well as our staffs—have approached launches in the very same way. JJ: How do you see digital affecting the print industry in the next several years? Will the printed magazine ever disappear? NV: First off, I don’t see SagaCity as a member of the print industry per se. We are not a magazine company but a media company—a storytelling company, if you will. And those stories are platform-agnostic. That said, shorter stories, at present at least, tend to work better in the digital sphere, while the longer reads—what we call “sit-back” stories—work best in print. I suppose print would be more in jeopardy if readers didn’t want 5,000-word stories, but the fact is that they do. We’ve seen that time and again in markets all over America. And then there’s the issue of revenue. While print is not responsible for 100 percent of our revenue, as it once was, digital is—even now—only about 20 percent of that total. Of course, digital pays dividends in other ways. It allows readers to interact with each other via our stories. Forty percent of our website traffic today comes from people sharing our stories on social media. We want to be involved in every element of the value chain. We’re dispelling the notion that business must be done from a cube farm by bringing you some of the coolest offices in the country. architecture in formation NEW YORK, NY Architecture in Formation PC is a young, emerging New York City architecture and design firm founded in 2001 by Matthew Bremer, AIA and Rice alum (B.A. Arch '90). AiF designed their 1,200-square-foot industrial office space, located in Chelsea. The High Line, a popular city park built on a historic freight rail, runs adjacent to the building. FUN FACT: Geoffery, Bremer's Italian greyhound (left), also holds the official title of office manager. I always remember the early days of CNN. com, and particularly an interview Ted Turner gave at the time. “What are you doing with the Internet? What are you doing with digital?” Turner is known for giving his best answers when backed into a corner, and that day was no exception. “You know what?!” he said. “I don’t give a damn if you watch it on your cell phone, your TV or your goddamned computer – there’s only one f*&%ng Gone With The Wind, and I own it!” A loud collective gasp could be heard in the room that day, but everyone knew he was right. SPRING 2014 JONES JOURNAL // 15 Photo by Troy Fields Ask the Experts While Corporate Social Responsibility (CSR) has been around since the 1950s, its importance and practice took hold after a 1991 article by Dr. Archie B. Carroll, a business management author and professor. In the “Pyramid of Corporate Social Responsibility,” Carroll defined a corporation’s four types of responsibilities: legal, economic, ethical and philanthropic. The Jones Journal brought together three experts to talk about CSR today and in the future. Joy Partain, Public Affairs Manager, Greater Houston/SE Texas, The Kroger Co. the communities that are significantly affected by its business. Frazier K. Wilson, Vice President, Shell Oil Company Foundation; Director, Social Investment, Shell Oil Company; Management Committee member, Rice University Shell Center for Sustainability JJ: What are the challenges of practicing CSR in your organization? Doug Schuler, Associate Professor of Business and Public Policy, Jones Graduate School of Business. Dr. Schuler’s principal research interests are corporate political activity, public policy and CSR. JJ: How does your organization define CSR? JP: At Kroger, we mirror our customers’ and employees’ philanthropic priorities. For example, 86 percent of our customers want us to support hunger relief, which aligns well with our commitment to local food banks (200 million meals donated nationwide last year). And 75 percent of our customers want us to support education ($50 million was donated last year across the U.S.). FW: Shell uses the term social investment (SI) to describe our efforts. It is the contribution of skills and/or resources to support communities and environments with lasting benefits. By partnering with communities we're able to create shared value for the non-profit and company. DS: CSR is a concept that covers a company’s recognition of the social impacts of its business, either in terms of its products and services it offers, its production methods and 16 // JONES JOURNAL SPRING 2014 JP: We have a great culture of volunteerism, but as Houston’s sixth largest employer, we can’t “mobilize” a ton of employees at one time without disrupting our 24/7 business. If half of a store’s employees leave to build a Habitat for Humanity house, the store wouldn’t be able to function. When 99 percent of your workforce interacts face-to-face with customers, they have to be at work. DS: I think there are two major challenges, external and internal. The external challenge, covered in two studies I conducted several years ago, is linking CSR to consumer actions. Some believe that CSR “pays off” because consumers prefer “high CSR or good” companies to “low CSR or bad” companies. But the studies show most consumers don’t know much if anything about a company’s CSR, others know but don’t care, and most seem unwilling to pay a higher price for a product or service from a “socially responsible” company. The internal challenge is that few at the senior management ranks outside of the CSR department’s managers seem to know or care about their company’s CSR practices. This makes it difficult to get large-scale commitment and resources and likely undermines CSR’s potential contributions. JJ: How does your organization measure CSR and social impact? JP: There are metrics and then there are the “unmeasurable” facets. In 2011, Forbes hailed Kroger as the most generous company in America. We consistently hear from our customers that they appreciate Kroger’s support of their favorite causes, and our employees’ commitment to CSR speaks volumes. FW: We measure the impact of our SI activities by assessing how it benefits society and business. Before a decision is made to support an effort, the key first step is to clearly define what is the shared problem between society and business? Second, why is this problem important to society and business? Additionally, what is the shared goal for both groups, and what strategies can we collaborate on that will produce the desired outcomes. JJ: How do you see the future for CSR? FW: I see the future of SI continuing to grow strategically and more recognized as a professional discipline. Being able to clearly articulate and develop plans to address community needs and business objectives is a valuable skill for any organization. It promotes a vested interest in everyone’s success. DS: More of it – but with ups and downs! If you look at the largest companies, almost all of them invest in CSR projects and publish external reports about their activities. If you go back 20 years, probably only a handful were doing such investment and reporting. CSR still has many challenges: measurement and reporting, integrating it into “commercial” activities, and getting more people within companies to realize the value of such activities. But the momentum is there. Left to Right: Joy Partain, Frazier K. Wilson and Doug//Schuler SPRING 2014 JONES JOURNAL 17 Your Career Your Career Asking the right questions: “I hoped the course would provide me with systematic approaches to dissecting important career-related decisions ... it far exceeded my expectations.” — Turner hoff ’13 A lesson in life strategy After 23 years with McKinsey & Company, just prior to his retirement, Bill Barnett began a regimen of meetings with friends and former clients. He asked what they thought might be a good next step for him. “One of the conversations,” he said, “was a recommendation to teach at Yale School of Management.” And for seven years he did teach — a business strategy elective for one quarter, each academic year. “It was somewhere around year five when I started noticing a trend,” Barnett said. “The students approached me before and after class asking for career advice.” Without missing a beat, he remembered taking the concepts he was teaching in the strategy class and applying them to his career advice. “It got me thinking, could I make a class out of this?” His proposal to do this was approved, but he taught the class only once before he left Yale after seven years. Taking another next step Today Barnett shares a corner office with several other adjunct professors on the second floor of McNair Hall. There are no framed pictures or personal effects. No nameplates or coffee cups. He occupies the desk and its view over Woodson Courtyard for only six Tuesdays during January and February. Today, he drove in from Dallas, where he lives, and relaxed before his 6:30 class, Career Strategy. “Before leaving Yale,” Barnett said, “the dean suggested that I write a book on 18 // JONES JOURNAL SPRING 2014 Former full-time student Turner Hoff ’13 now works as an associate in the U.S. real estate team at The Carlyle Group, a global alternative asset manager, in Washington DC. With no prospects on the horizon, he took Barnett’s course four months before graduation. this idea of applying business strategies to your career.” It took him a year of thinking about it to decide it was something he could do. “But I needed real cases.” Because his youngest daughter was attending Rice at the time, he was well acquainted with the reputation of the university and the business school. He was introduced to Professor Jeff Fleming, and by winter term he was teaching his first Career Strategy course at the Jones School. That was four years ago. His own career path A West Point and Harvard Business School grad, Barnett was a captain in the U.S. Army in Vietnam. He worked in the program analysis and evaluation group of the Office of the Secretary of Defense and was a member of the U.S. delegation to the force reduction negotiations between NATO and the Warsaw Pact. He also worked in the State Department where he started a new policy assessment office in politicomilitary affairs. “During my career with McKinsey, I advised clients on strategy, performance improvement and organizational effectiveness,” he said. “I also led their strategy practice – the group that determined how to improve the firm’s strategy development capability.” He is no stranger to the written word either, having authored articles on strategy topics in publications such as The Wall Street Journal and the Harvard Business Review. These experiences made for the perfect preparation for writing a step-by-step guide to a winning career strategy. But, in order to write it, he needed real people setting real strategies for their careers to illustrate the relevance to business strategy development. Enter Rice MBAs. Building skills and camaraderie Space in his course is limited to 20 students. “They have to write an application on why they want to be in the class,” Barnett said. He likes to know that they can write, and that students already are thinking deeply about their career progression. “I take the methodology and push them through it. They learn from me, they learn from their classmates and they learn from themselves when they do the exercises in the course.” “I hoped the course would provide me with systematic approaches to dissecting important career-related decisions and more direction regarding career paths that would be well-suited for me. It far exceeded my expectations.” For Hoff, the course required a lot of introspection. “I came away with tools to help me assess my strengths and weaknesses, as well as industries and job functions that may interest or disinterest me. I learned about different analytical tools and exercises to help me to organize my thoughts and better understand the rationale behind making important decisions.” Three months later Hoff had six job offers and accepted Carlyle’s. “Decisions have a significant impact on your life. Without thoughtful approaches to help break down the components of a decision, I think it’s easy to get lost or sidetracked in the wrong details. I am now equipped with tools to help me better analyze critical career-related decisions.” EMBA Julie Francis ’13, global director of R&D at Albemarle Corporation, was in a completely different place when she took Barnett’s course. She had been with her company for 15 years. “I have always been in science and had progressed my career to R&D director, but I was still unsure about what my path forward should be. I looked at the course as a way to crystalize what I wanted to do.” Equipped with a Ph.D. in chemistry from Rice, Francis knew the journey wouldn’t be easy. “I knew he wasn’t going to tell me, ‘this is what you need to be.’ I ended up getting tangible tools to help me make decisions based on data rather than just feelings. He allowed me to define my future very clearly in my head. I knew very succinctly what I needed to do. Now I have a path forward. I know what to chase. I am proactively pursuing where I want to go rather than just floating toward an end point.” She said she is still using the tools a year later. “Environments change. Your appreciation for things change. Define your path. If change is required, you know what to do to make that change. "You gain insights into you. Apply all the business principles, design an actual strategy for your career. You don’t leave it to luck or chance. You let the data make the decision for you.” Hoff admitted he was in the process of considering an entrepreneurial career move. “In doing so, I’ve used one of the tools from Bill’s course to help me evaluate my options. It’s still a little too early to tell what the outcome will be, but I imagine that I will be contacting him in the coming weeks with questions.” Whether teacher, mentor or friend, Barnett insists, “I learn as much from the students as they do from me.” A winning value proposition for any professor. Career Strategy MGMT 714 Course Description Business schools and professional schools prepare students for jobs and careers. Beyond career offices, however, few schools help students develop skills in making decisions about their jobs and careers. These are big decisions. Building skill to make these decisions is the purpose of the Career Strategy course. The course shows how to answer the five questions that define career strategy: 1. What are my aspirations? 2. What is my winning personal value proposition? 3. How to find a good opportunity? 4. Which opportunity to accept? 5. What long-term initiatives to take? The course emphasizes questions, not answers, because the best career decision for one person will be different from the best decision for someone else. These questions will stimulate students to leave their comfort zones and rethink their current directions. They’ll help build skills to plan a career again and again into the future. Learn more about Bill Barnett at MyStrategicCareer.com and on his career strategy blogs at HBR.org. — Weezie Mackey SPRING 2014 JONES JOURNAL // 19 Your Career Your Career Hire Ed The official Jesse H. Jones Graduate School of Business page (Rice MBA) A conversation in career management with Fabiola Currarino, executive director of the Career Management Center. JJ: With increased economic activity in Houston, has the CMC seen an increased demand for MBAs? FC: In general our students tend to stay within the Houston area, so it’s a very important market for us. The increased activity within the city’s economic environment absolutely has a positive effect on our students. We’ve seen it in multiple ways. On-campus recruiting opportunities, for example, where more companies from the Houston area come in and hire through our structured process. Also students are doing their own networking, looking for their own specific opportunities. They find companies that have not typically hired MBAs but are starting to understand the value of MBAs — Rice MBAs in particular — and hiring them. JJ: What are the industries hiring Rice MBAs? FC: We’re seeing a consolidation of industries, 85 percent of our 2013 full-time MBA graduates accepted offers in four industries. In 2013 we saw technology come back strong (10 percent), and more students accepting offers in consulting (20 percent), diversified financial services (23 percent), petroleum and energy (33 percent). For the class of 2014, we are observing a very similar industry distribution, with the addition of health care accounting for seven percent thus far. JJ: What are the most recent initiatives? FC: There are a number of initiatives that we’ve seen as areas of opportunity for the CMC since I joined the Jones School: Health Care Fellowship: In order to help students gain experience in health care, we provided fellowships that supplemented employer salaries. This allowed students to consider the opportunities without salary being the main factor in their decision. Once the MBA interns demonstrate their value, the hospitals realize the benefit and provide their own funds to bring more people in and, subsequently, hire our MBAs for fulltime positions. We granted four fellowships this past summer to first year, full-time students. By February this year, three out of our four fellows have accepted full-time offers with hospitals in the Houston area. Given its success we will continue to offer this opportunity this summer. Super Info Sessions: We have more companies than dates available for info sessions. So we tried something called a super info session with six non-competing companies coming in to a 20 // JONES JOURNAL SPRING 2014 one-hour session. They make their pitch to the students in 10 minutes, saying who they are, what their team is, what their projects are, and what they’re looking for. The value for the companies is seeing 60+ students. The value for the students is that they heard from companies they might not have signed up to see otherwise. Intake Sessions: Intake sessions provide the opportunity for each student to have a one-on-one conversation with an advisor, early in the program, to talk about predetermined topics. We ask them about their preferences, and where they are in their career efforts so that we understand as a whole, what the class needs are. What are the new trends, not only for the full-time students but also the professionals and executives? The data is very important and powerful for us. The students make a connection to the career center early on and start the process of defining what they want. On our end, we’re getting to know the students better and getting hard data, which will allow us to tailor programs and tailor our outreach to companies. Diversity Conferences: The career center has always participated in diversity conferences. As previous lead academic partner for National Association of Women MBAs (NAWMBA) and National Society of Hispanic MBAs (NSHMBA), the Jones School prides itself on its role of supporting its students and other MBA candidates who attend corporate recruitment efforts. We made the decision this year to become the first academic sponsor of National Black MBA Association (NBMBAA). Supporting the organization, the students, and companies that all come together — this year in Houston — was a significant opportunity for us. JJ: What alumni services does the CMC provide that alumni might not be aware of? FC: We have a dedicated advisor for the alumni, Marie Bergeron. Alumni can set up an appointment with Marie and sit with her one-on-one to discuss an array of things — career transitions, offer consideration and negotiation, and resume building. Anything, really, about their careers. That’s part of the investment they made as students, and it’s a service they will continue to have access to after graduation. We currently provide the job board — MBA Focus — to find jobs nationally. Companies select schools they want to post jobs to, targeting our alumni or experienced hires, which would be the EMBAs. We’re planning a series of webinars with relevant content for alumni in different stages of their careers and in different industries. March 6 . Houston, TX "How did you adjust to your first job or role after graduation?" Dr. Jamil Joyner, EMBA ’14 Like . Comment . Share Asher Moshe Belles ’07 Talk to everyone you can get time with. Ask them how your role either produces something they use or uses something they produce. Ask what you can do to make it better, and do it. April 1 at 1:04pm . Like Mary Bourne Marth ’87 I just had to respond to this because a memory came flooding back that really made me smile. My first day as an assistant product manager at Texas Commerce Bank threw me a challenge that my MBA training did not prepare me to handle: I was asked by my new boss to send a fax! Now this was not a strategic challenge of course, but how to operate a fax machine was not part of the Jones School toolkit. I’m not sure if I even knew what a fax was. I sheepishly asked a colleague for assistance and was a veteran faxer by the end of my first week! Ask the Alumni The Jones School is a place where students from all backgrounds can gain knowledge from a stellar faculty, but they aren’t the only people students look to for answers. Alumni have a vast amount of knowledge when it comes to navigating the path through business school, so before each issue, we will pose a question from a current student on our alumni group facebook page. Join the group and share your thoughts at facebook.com/groups/ ricembaalumni. Later that day I was asked to help prepare a launch marketing plan for a new deposit product, and I was able to easily knock that assignment out of the park drawing on my newly acquired Jones School expertise… April 15 at 11:51am . Like Crystal Maxwell ’03 My biggest challenge was keeping up with all the information. In business school we were required to digest a lot of information, but it was still a finite amount. In the investment industry, the information never stops coming. It was like drinking from the proverbial fire hose. I wanted to read everything but soon discovered that even if I read all day I wouldn't cover it all, and then the following day there would be just as much new information to read again. I even remember emailing Jill Foote and asking her for advice. I eventually came up with a system to weed out what I didn't need, but it took some time. April 15 at 2:28pm . Like SPRING 2014 JONES JOURNAL // 21 L I F E L O NG T A L E N T C U LT I VAT I N G ACCOMPLISHED E XECUTIVES CHANGING With Executive Education By Susan Chadwick Professor James Weston moves exuberantly to the front of the class. It's spring break for Rice University, but some of these students have traveled from around the globe to sit in Room 116 of McNair Hall on this sunny morning. They are men and women with years of real-world business experience, a mix of corporate and business unit leaders, senior project leaders, and senior sales executives who on this day are learning the common language of corporate finance and financial markets so that, as Weston later explains, they can "connect better with the finance and accounting people that they work with." Weston strides enthusiastically back and forth, his somber dark grey suit and light blue tie belying the wit and energy of his delivery. "This class is going to be like a Jet Ski," he proclaims. In one day these executives are going to learn "the major terms and conceptual levers of financial-decision making" and "hit on the core topics" of a normal semesterlong graduate course in finance. 22 // JONES JOURNAL SPRING 2014 The casually dressed students, all seasoned employees of one of the world's largest energy infrastructure service companies, seem unfazed by the academic challenge. It's Finance Day in a two-week long Advanced Leadership Program provided by Rice University Executive Education. Part of the Jones School's custom corporate offerings, this particular program was formulated for CB&I, headquartered in The Woodlands and one of Executive Education’s biggest and longest-term corporate clients. "I'm not an accountant," the youthful Weston tells the class, many of them older than he is. "I'm a finance guy." "What's the difference?" a man in the back asks. Weston is delighted. And thus begins a lively romp through financial valuation, compound interest, discounted cash flow, capital budgeting, net present value, risk adjustment and more, with Weston patting the blackboard, calling executives by first name and inspiring debate with cries of "Yeah!" and "Why not?!" Development of opportunities Founded in 1978, Rice Executive Education has grown by 300 percent over the last three or four years, says Jonathan Harvey, executive director of Executive Education at Rice. Part of the reason for the growth is the uplift in the economy, Harvey says. Houston, energy capital of the world and second only to New York City in the number of publicly traded companies headquartered here, has been booming while other major cities stagnated. And part of the reason is that companies, particularly in the oil and gas sector, are looking at a "demographic hole" between retiring executives and younger talent in a position to take their place, says Harvey. "Companies are concerned that they are going to be challenged to retain top talent," he says. "The company has to plan for the future. And one way for a company to do that is the development of opportunities. "It's part of the company's talent retention strategy." In the 2012-2013 academic year, Rice Executive Education delivered 46 separate courses — 14 percent of them internationally — to 1,231 participants, of whom 90 percent were post-MBA and 50 percent were in strategic or succession roles, says Harvey. Executive Education at Rice is divided into two types of programs: standard, open enrollment programs and the elite, customized "coaching" specifically designed for a company's strategic needs and goals. These custom-built programs, such as the one in which Weston is teaching, account for two-thirds of Executive Education, says Harvey. Unlike the open enrollment programs, which are taught within the school and attract ambitious business leaders from around the region, the custom programs are also international, delivered in business and industrial centers like The Hague, South Korea, Singapore, and Baku, Azerbaijan. Typically these custom corporate programs, specially built after lengthy analysis and assessment by the faculty, will have 25 people or so from the same company, with experience levels ranging from 10 to 30 years. Most often these executives are being groomed for the next level of leadership and have been chosen by the company for the Executive Education courses. It’s not all Fortune 500 companies "It's fair to say we have a strong presence in the oil and gas sector," says Harvey. "We are developing a reputation that we understand their business: the implications and nature of what it means to explore and drill and refine the upstream and downstream." Beyond what one might expect from the energy capital, Rice Executive Education deals with a host of varying industries. The school’s close collaboration with and proximity to the Texas Medical Center, the largest in the world, generates business programs for health care professionals and physician executives. In addition, the Executive Education faculty has developed ongoing programs for the Houston Independent School District (HISD). The school district is not a typical Executive Education client, explains Brent Smith, senior associate dean of Executive Education and associate professor of management and psychology at the Jones School. But like their other business clients, HISD came to Rice to solve a particular strategic or operational problem. In the case of HISD, it was to teach school principals to market their schools more effectively to their "customers," the parents, says Smith. "Given the free market for education, parents can now choose magnet schools and charter schools. We are teaching customerfocused marketing to principals." SPRING 2014 JONES JOURNAL // 23 "i never thought about it that way" The Executive Education faculty trains about 40 school support officers to coach school principals about "what the school really is, how to analyze its problems and organizational development." The faculty also works with HISD administrators, the cabinet and the superintendent. Open to anyone In the open enrollment offerings, which make up one-third of the Executive Education program, certificates are awarded in finance and accounting, health care management, customerfocused strategy and leadership. And courses in executive development focus on the skills needed for greater management roles. The open enrollment program is just that: open to anyone, generally those who also are preparing for major transitions in their business careers, either as business owners themselves or "looking to advance their career within a company," says Karen Nelson, the Harmon Whittington Professor of Accounting. "It's 30 random people showing up in a classroom, sometimes two or three from one company. By the end of the week a lot of them are exchanging information, wanting to 24 // JONES JOURNAL SPRING 2014 stay in touch," she says, echoing comments from other professors about the bonding, and sharing of experience in these open programs. "It's not all Fortune 500 companies," Nelson points out. "Some of them come from smaller, private, family-owned businesses; they're people who decided they need to get up to speed," or "people starting their own business, who've been in the corporate world for a while and are rounding out their skill set." Natasha Baughman of Columbia, Mississippi, is one of those people. The 37-year-old attended the open enrollment Accelerated Development Program (ADP) this winter along with her younger sister, Melissa Jones. Their father started Quality Manufacturing Group, an oil-and-gas related manufacturing business in Columbia in 1994, and it now has 120 employees. Baughman, who joined the family business in 2006, is vice-president of operations, and she and her sister "are working towards taking over leadership of the company," she writes in an email. Baughman heard about Rice Executive Education through a customer who had recently attended the leadership program and highly recommended it, she says. After talking with Executive Education staff about it, she decided to attend the ADP. "I feel that I have gained a great deal of knowledge about myself as a leader and have a better understanding of ways that I can continue my professional development more strategically rather than generically," she says. "I also have made connections with other leaders who are a great resource for continued mutual growth." James Wei of Houston looked at programs at Harvard and the University of Texas before deciding on Rice for its value and location. The 31-year-old is taking over the family-owned office supply business in Houston, whose main customer has been the federal government for the past 30 years. With the downsizing of government, "we need to diversify," says Wei. Thanks to a background in Internet technology, Wei is hoping to help his family's company diversify into IT office solutions. "We can compete with consultants by concentrating on small businesses instead of larger enterprises," he says. But he needed "a push in terms of education, management, and strategy to take my leadership to the next level," he says. "It helped me to work through my competitive strategy. "I was thinking structure. But actually you have to have strategy first. Then structure follows. This has really helped me." That's what Harvey fondly calls "the immediacy of the impact" and part of "the beauty of what we do — a guy gets to use on Monday what he learned on Friday." The slightly different way In a strategy class with Prashant Kale, associate professor of strategic management, “The goal is to push these experienced executives to challenge their assumptions, individually and as a group, to change their perspective on why they do what they do. I'm playing the devil's advocate," Kale tells his students. "In this class we challenge everything." Kale uses a quote from Doris Lessing to explain his teaching approach: "What is learning but to understand something you've understood all your life but in a slightly different way." Professor Nelson says, 'I never thought about it that way' is a common response from her executive students in financial reporting. "They come away with a better understanding of what their company is doing, what investors and the board of directors are looking at." In his high-level custom classes, "the philosophy that I share up front is that each one of them has a lot of experience," says Kale. "Collectively the experience in the room is several hundred man-years. They know their industry well, better than I." Sometimes too well. Part of the teaching task is to enable executives to move out of their own silo and into crossfunctional management. And Kale says Jones School professors bring their experienced students enlightening perspectives from other industries. The students also bring enlightening perspectives to the teacher. The classes can "become an opportunity to identify a good topic of research," says Kale. "It's a two-way street. We learn as much from them as they learn from us." Does he encounter skepticism? "There's always skepticism. They're spending valuable time and money to be there." But Kale and other professors in the program have research to back them up. "I am able to emphatically say something because there is a body of research behind it. It gives them comfort. It's not just my opinion. It's not a random case." Kale welcomes the skepticism. "It keeps us on our toes. We can't take anything for granted. I have to keep reminding myself every time I go up to bat: my score is zero." Executive Director Harvey is upbeat about the future. “In our program, Houston and regional business leaders have a resource that helps them challenge themselves, grow themselves and their companies and institutions. The success of these companies has made our Houston metropolitan area vibrant and dynamic. We like to think, as partners in development, that we have contributed to this and that we will do even more in the future as Executive Education grows with our ever-expanding global business community.” SPRING 2014 JONES JOURNAL // 25 TOP TALENT ACQUIRING & DEVELOPING LEADERS school in the country. According to Battista, it’s working: “We’re very quickly building that reputation, and other top business schools are starting to follow suit.” Associate Director of Financial Aid Salomon Medina believes a university is an ideal partner for veterans seeking to rebuild their lives. “We’ve got the transition from civilian to warrior down; we don’t have the transition from warrior back to civilian very well,” Medina says. “Opening up education as a door to that transition is incredibly important … just by its very nature, an educational experience can be and often is a metamorphosis.” In his former life, Jimmy Battista '13 was a U.S. Navy SEAL platoon commander — 18-hour days, high-stress missions, Middle East deployments and all the rigorous demands of an elite military team. These days, Battista helps handle acquisitions and divestments for international mining, and oil and gas company Freeport-McMoRan. The transition from active duty to a corporate career, he says, can be surprisingly tough. “I had 21 guys in my platoon deployed to some very dangerous places,” Battista says. “A few months later, you find yourself sitting in an office behind a computer, working on spreadsheets. It takes a while for that mindset and pace to settle in.” Connecting with other students facing the same challenge was one reason Battista, 34, helped start the Jones Graduate School of Business’s Veterans in Business Association (VIBA) in 2011. He also believed VIBA had the potential to grow well beyond informal networking. He was right. Today, VIBA hosts two annual events, raises money for veterans’ charities, provides networking opportunities for vets and nonvets, and offers invaluable support as students navigate the transition from military to MBA. Its success is one example of the leadership veterans are bringing to Rice University. They say that initiative is simply part of their skill set: identify an opportunity, create a plan and execute. 26 // JONES JOURNAL SPRING 2014 Removing Barriers, Raising Profiles VIBA members are quick to applaud the school’s and donors' unwavering support and tireless efforts on both scholarship and programming initiatives. They also note Rice’s goal to have veterans or current service members make up 10 percent or more of the full-time MBA class by the 2015-2016 academic year. “Veterans bring a unique brand of creative leadership to class and on campus that enriches the educational experience of their peers,” Dean Bill Glick says. “That’s one of the reasons they are highly sought after among top-tier programs across the country. Their positive impact on the Jones School is unparalleled, and we believe that further support for veterans provides a boon to us as well as to the business community. This is key to our strategic investments to acquire and develop top talent.” Two initiatives demonstrate Rice’s commitment to attract and support high-caliber veterans: the Military Scholars Program (MSP) and an increased contribution to the Yellow Ribbon Program. The MSP, launched in 2013, is a generous package covering tuition, fees and approximately $25,000 in living expenses for a full-time MBA student. Donors have been enthusiastic, giving more than $1 million in 2012. Rice also boosted its contribution to the Post-9/11 GI Bill’s Yellow Ribbon Program. The Department of Veterans Affairs matches schools’ support dollar-for-dollar, but some students faced a funding gap after Congress capped coverage of private school tuition. Now, Medina says, the MSP, GI Bill and Yellow Ribbon help veterans cover the cost of attending the Jones School. “We want to remove any financial barriers as much as possible,” he says. VIBA also created two annual events, The Veteran Experience and the Rice Veterans Leadership Series, which launched to great success in 2013. VIBA President Mike Freedman ’14, a former Green Beret, says the events achieve multiple goals: providing valuable programming to the Jones School community, building ties with accomplished individuals who support the school and VIBA, and expanding networking opportunities. “Leaders from the military are trained and experienced in identifying, evaluating and processing risk, and making good decisions in uncertain environments with limited resources. These skills are highly transferable, especially here in Houston and in the energy industry,” says Battista. Freedman, 33, published his debut novel, School Board, in April, so it is fitting that the first Veteran Experience panel brought six awardwinning authors to Rice — Bill Broyles (Rice ’66), Ben Fountain, Bruce Jay Friedman, Karl Marlantes, Lea Carpenter and David Abrams. Each fall, Jones will host a panel of distinguished speakers. VIBA is also pursuing a bigger mission — together with the Jones School administration — to make Rice the most veteran-friendly business “It puts a spotlight nationally on Rice because it gets a lot of attention,” Freedman says. SPRING 2014 JONES JOURNAL // 27 The Leadership Series, launched in April 2013, also hosted high-profile participants, including former Gov. Tom Ridge and in an internal event earlier that month, former 61st Secretary of State James A. Baker III. Not stopping there, VIBA also has raised money for Suits for Soldiers, Fisher House and the 9/11 Hero’s Run for the Travis Manion Foundation. “It’s like you come in, you identify an opportunity and say, ‘How can we make it better?’” Freedman says. “I think veterans are grateful and want to pay it back.” A desire to pay it back also motivates Mike Tatz ’14. He first encountered VIBA as a business school candidate, and says Rice was by far the most helpful during the application process. Now, as VIBA’s vice president of admissions for service academies, Tatz, 30, is a resource for other vets considering Rice. “We realize how difficult that transition is,” he says. “Having a great support system of current students was incredible to me, so we’re trying to pay it forward as best as we can.” Tatz, a West Point graduate, was an Army captain specializing in nuclear missile defense. After graduating this spring, he’ll work in investment management at Goldman Sachs in Houston. He is also supporting the creation of a nonprofit organization to connect veterans with jobs by helping employers recognize the value of their skills. Tatz isn’t the only veteran contributing outside the Jones School. Freedman serves on the Emerging Leaders Committee at the James A. Baker III Institute for Public Policy. David DeFilippo ’14, VIBA’s vice president of career management and a former Air Force meteorologist, is also vice president of strategy for the Net Impact chapter, which focuses on organizations' roles in corporate social responsibility, social entrepreneurship and sustainability. A Strong Support Team The transition to civilian life has its rewards: new challenges, the chance to shine in another arena, a lifestyle more suited to raising family and putting down roots. Yet former service members also face challenges. Veterans of combat, deployments and even stateside operations have deep expertise, but it is not always clear how that translates to a business setting. Others find the corporate world new and unfamiliar. 28 // JONES JOURNAL SPRING 2014 “Hands down, there is no better MBA program for veterans in the country than Rice ... Our mission of VIBA is to support vets. It’s something truly special.” — Mike Tatz ’14 “You spend a lot of time doing something and becoming an expert at it, and all of a sudden you’re thrust into a new industry that you may or may not know anything about,” Battista says. “It’s starting from ground zero again. I think that’s a real shock to people sometimes.” Tatz says he had to learn business as opposed to military etiquette. He even had to find a new way to talk about his experience so that people understood it. “I used terms like ‘in my brigade,’ ‘battalion,’ ‘company commander.’ This is second nature and how you express what you do in the military,” he says. “People outside the military have no clue what you’re talking about.” Other vets miss their former sense of mission. Some VIBA members have channeled their drive into the goal of making Rice as veteran-friendly as possible. That’s not inconsequential as business schools compete for high-quality applicants, a growing number of whom are veterans. According to the American Council on Education’s 2012 Soldier to Student II survey, universities nationwide are stepping up services for veterans and active-duty students. That trend likely will continue as veteran enrollment climbs. Between 2009 and 2012, schools went from an average of 156 to 370 veterans and 201 to 453 active-duty students. Unique Skills Add to Jones Community Yet veterans also find their military experience serves them well, in school and the workplace. According to VIBA member Cory Thigpen ’15, a former U.S. Navy lieutenant, vets understand the cooperative-yet-competitive dynamic that characterizes both the armed forces and intense environments such as MBA programs. He predicts veterans’ leadership will continue to emerge at the Jones School and beyond it: “That’s become natural to us. It’s seamless for the veterans to be in those positions of leadership.” Others say their service developed well-honed skills in strategic thinking, problem solving and execution of complex tasks under difficult circumstances. According to Freedman, that is especially true of veterans who served in Iraq and Afghanistan, where guerrilla warfare placed significant decision-making responsibility onto junior officers. “You’re used to dealing with these incredibly unconventional, bizarre, complex situations overseas in recent wars that were intellectually demanding,” Freedman says. “I’ve never had to think more than when I was in combat.” Several veterans say such experiences left them with a calmer outlook, unfazed by concerns that may rattle their peers. “While some of my classmates were just a year or two ago being shot at in Iraq or Afghanistan, or sitting in Humvees where IEDs were going off, you realize that … getting a certain grade in a class is not going to change your life,” Tatz says. The veterans are far from nonchalant about their schoolwork though. In fact, they are highly motivated to perform well, but they do encourage classmates to worry less about minor hiccups. DeFilippo says that dynamic goes both ways. assistant operations officer in the Marine Corps and now an associate with McKinsey and Company, believes Rice alums will continue to excel as they enter the workforce. “We lean pretty heavily on our non-vet classmates, and they really support us,” says DeFilippo, 32. “We bring these experiences, we bring a certain depth of insight into the government and the armed forces, and maybe a different worldview, but they provide us with a depth of experience that we never had, which is basically what it’s like to work in a company.” “In my experience … vets hold themselves to a very high standard in their work, professionalism and dedication to the team,” he says. “Most of all, vets bring the camaraderie of the military and the desire to see those above, next to and below them succeed.” Looking forward, the vets are eager to continue making Rice the nation’s most veteran-friendly business school. Brian Walker ’12, a battalion training officer and “Hands down, there is no better MBA program for veterans in the country than Rice,” says Tatz. “Our mission of VIBA is to support vets. It’s something truly special.” Top Michael Freedman '14 speaks at the 2013 Rice University Veterans Day Ceremony. Opposite and above Scenes from the 2013 Rice University Veterans Day Ceremony Photos by Jeff Fitlow In the meantime, Rice’s vets are focused on their mission. SPRING 2014 JONES JOURNAL // 29 FAC U LT Y RESEARCH SHAPING BUSINESS W I S D O M $ the price is right ...OR NO T EY B Y W E E Z IE M A C K things are changing. What would that mean for firms? Are firms changing with it or not?” It took three years to convince the journal Marketing Science to accept a paper Amit Pazgal, professor of marketing, wrote with Ganesh Iyer at Haas School of Business, UC Berkeley. “They didn’t believe our conclusions,” Pazgal said. “We had to gather more data for six months. But when it came out, there was a lot of interest because people were starting to analyze buying online. It was one of the first theoretical models that had the support in reality.” As with all Pazgal’s research, one of his well-cited papers, ‘Internet Shopping Agents: Virtual Colocation and Competition,’ reflected the firm’s perspective. Back in 2003, it found that firms using an Internet shopping agent — a website that allows a consumer to compare prices between stores — varied their prices substantially for any given search of identical goods … even though common sense might dictate that competition would lead to uniform prices and maybe even a drop in price to stay competitive. The research problems he was interested in at the time posed two questions: 1) How does the firm decide which of those shopping agent sites to join if at all, or should it join several; and 2) How does the firm price, given the fact that some customers are searching for the lowest price and others come to the website directly because they are store loyal? The research began where it typically does for Professor Pazgal. “From looking at the world,” he said. “For instance, I used a shopping agent online and thought this is a new world, 30 // JONES JOURNAL SPRING 2014 No one was researching Internet shopping deeply at the time. “We said, let’s see what happens. We followed it for a while and saw prices change a lot. Why do prices change a lot? Let’s say everybody in the world compared prices and went for the cheapest; if everyone knows that my price is set, then it’s very easy for my competitor to undercut me by five cents, and they will be above me on the list, and everyone will buy from them. What do I do? I keep changing the price because I don’t want them to be able to anticipate what it will be. That’s fine. Now, can you quantify it? Can you come up with a mathematical model that actually predicts that?” The answer was yes, and they did. Standing firm on firms Recently appointed academic director of operations management, Pazgal joined the Jones School in 2006 after nine years at Olin School of Business at Washington University in St. Louis. With a B.S. in physics and mathematics, magna cum laude, an M.S. in mathematics and operations research, summa cum laude — both from Tel Aviv University — and a Ph.D. from Kellogg at Northwestern, he could’ve taught math. “I look at problems that are slightly more mathematically challenging. I want real-life problems that are not solved immediately by intuition.” He considers himself somewhat unique in marketing. “I have a diverse background, and I care about different problems. Along with marketing, I do a lot of research which is considered economics and a lot of research which is considered operations.” Some of what Pazgal researches involves the Internet, some is retailing or even commitment mechanisms. “But all of my research has to do with pricing. I’m intrigued by all aspects of pricing. I’m interested in understanding real institutions and in twists that show that our everyday intuition fails to explain common firm strategies.” On the first day of class, he asks his students: ‘If you could choose any price in the world, what would be your best price?’ And he almost always gets the same answer. “They say zero … like, free. I tell them that’s because you’re thinking like consumers. And it shows people that we tend to think as consumers even though we’re managers and executives now. What’s good for you as a consumer is not always good for the firm.” When Pazgal talks about pricing, it’s about how firms price. “Marketing has another area that studies how consumers perceive prices. I take that as a given. For me the consumers are taken as a black box. They behave in a certain predictable way, and I’m the firm, which is a rational, profit-maximizing entity that tries to get as much money out of the consumer as possible.” In 2003, when the Internet shopping agent research was published, companies found Professor Pazgal and wanted to know more. “So I gave a talk to some of them. They liked to see that someone was thinking about their problems, but it showed me that they’re interested in minute implementations, and I’m interested in ideas.” SPRING 2014 JONES JOURNAL // 31 “The best price would be the one that makes the most money. But what is that? [firms] face potential consumers that care about prices and consumers that don’t and consumers that must have the item immediately and some that are happy to wait in order to save money.” Strategic consumers Although Pazgal explored firms’ perspectives and considered consumers black boxes, he made one consistent assumption about consumers over the years. “They are sophisticated.” He illustrated their impact in a paper published in 2008, ‘Optimal Pricing of Seasonal Products in the Presence of ForwardLooking Consumers.’ The research discussed pricing strategies of retailers in brick and mortar stores, and how forwardlooking customers changed the environment completely. It was the lead article in Manufacturing & Service Operations Management, an operations journal. “This stream of research has to do with pricing and selling of limited inventory items, and how a retailer can make the most profit from it. Operations management literature talks a lot about inventory. That’s what they care about — inventory and replenishment of inventory. But we care about prices.” Despite being relatively new, the paper he published with a former colleague at Olin, Yossi Aviv, was one of the first in the operations management literature to analyze the impact of strategic consumers. For this reason the paper, like the Internet shopping agents paper, was well cited. It was also a driver in the new literature stream analyzing consumer impact on sales practices. Pazgal and Aviv looked at seasonal inventory, in this case bathing suits. “You’re trying to sell it until the end of the season, and the question is: what’s the optimal thing to do? It seems 32 // JONES JOURNAL SPRING 2014 trivial. The retailers should have thought about it a long time ago. They did, but they didn’t always account for the fact that consumers know and anticipate that there will be discounts.” As Pazgal said, consumers are not ignorant. “They know there will be a sale or that prices will drop. They’ve bought bathing suits in the past. If I come in a week, it will probably be cheaper. Maybe if I know there is a 4th of July sale for bathing suits, I’m going then. If it’s not there anymore, that’s okay.” What happens to the inventory that doesn’t sell by the end of the season? It’s heavily discounted. Conventional wisdom might suggest that retailers should figure out that they will have excess inventory at the end of the season and buy less. “We say, no. They know that they will be left with a certain amount of product at the end of the season with some probability, but they need to have enough and then experiment with the really high prices at the beginning of the season. The benefit is huge if they get some people to buy at the $300 level, for example, before they drop it to $200. The retailer knows that at the end of the season they will be left with 20-30 items per store. They take it into account, and still they make more money than they would by not having those 20 or 30 items and starting at a lower price. The problem is it’s statistical. There’s some fluctuation with demand.” Yield management A firm’s goal is to sell their inventory by the end of the season. Do they tell their customers that there will be a discount of 40 percent on a certain date from the beginning or not? If they do, how will it change the customer’s behavior? What should the firm do? “Our research shows how you should price during the entire selling period, and you should pre-commit to a sale. But there is an area called yield management, which is on the border of marketing and operations. It talks about pricing of limited quantities that you have to get rid of, like airline tickets and rooms in hotels. Our research shows that retailers need to take into account the fact that their consumers are sophisticated and react to the pricing strategies they see.” From the firm’s perspective, what would be the best price for seasonal items? “The best price would be the one that makes the most money. But what is that? They face potential consumers who care about prices and consumers who don’t and consumers who must have the item immediately and some who are happy to wait in order to save money.” Pazgal and Aviv wrote a simulation software that could tell retailers what their price should be at any given moment based on their initial inventory, sales so far and where they were in the selling season. “So literally you could change your price every hour. We told retailers: you should start with high prices and experiment a lot at the beginning. The retailers said no.” Even when they explained their findings, the firms were reluctant to implement their strategy. “We told them they were pricing incorrectly. We told them the bottom line can be improved by three percent, which is huge for them, but they were afraid. We had talks to try it in a particular store and, as one of the managers bluntly told me, it’s my job on the line, not yours.” 12.99 10.50 $ $ A new way of looking at things When a piece of research is nominated for any award, but more specifically a long-term impact award, what does it say about that research? In 2012, Pazgal’s Internet shopping agents paper was recognized nearly a decade after it was published. “There were hundreds of papers, and we were one of five nominated,” he said. “People were interested in what we were saying. We created a slightly new way of looking at things.” That is the point. “Even today, people teach that paper in Ph.D. programs because, although it’s old in Internet time, the mathematical modeling still applies. It’s not an off-the-shelf type of model. It has a twist.” In a recent ongoing research project, Pazgal and his co-authors, David Soberman from Toronto and Raphael Thomadsen from UCLA, investigate competitive environments where new entry or shrinking consumer markets are actually beneficial for the existing firms. “The common belief is that competition is bad for companies. I want to say, ‘not necessarily.’ Of course, there is the standard line that competition fosters innovation. That’s great. But I wanted to investigate and show cases where the entry of a competitor into your industry actually makes you better off without your having to come up with new products.” In the Marketing Science paper ‘Profit Increasing Consumer Exit,’ they demonstrate the counterintuitive result that firms may benefit if a segment of indifferent consumers leaves the market. Profits can increase for all firms even if the exiting consumers have strong preferences for only one of the products in the market. The reverse — lower profits when markets grow — can also occur for similar reasons. In a manuscript — ‘Location Choice and Profit-Increasing Entry’ — still under review with Management Science, Pazgal and the same co-authors show that a competitive entry of a new firm into the category may result in higher prices and even higher profits for all incumbent firms. The new entrant captures a certain part of the market, allowing the existing firms to concentrate on their more loyal consumers, the ones who prefer their products (similar intuition to the Internet case where more competition causes the firms to give up on the price sensitive shopper and concentrate on the more loyal consumers), charging them higher prices that may more than compensate for the loss of some market share. Researchers don’t always know when they dive deep into a subject if it will come out with a twist or something counterintuitive that will change the way business is conducted. They don’t always know if something that takes years to publish is going to make any kind of lasting, significant impression. “My paper with Yossi [seasonal pricing] was very difficult to publish. We had a previous version circulating for a few years and nobody wanted it. But after it was published, it won the long-term impact and the pricing award … in operations.” Showing the field — marketing, operations or any other — something it didn’t know before, illustrating a new way of thinking about a problem, opening up a new area of inquiry is no easy task. Amit Pazgal, his natural curiosity and open approach to scholarly topics, has contributed to the big ideas of academia and business practices in a way that earned him not only research and teaching awards but also stimulated a fresh conversation about research at the Jones School. SPRING 2014 JONES JOURNAL // 33 Community Community Decade of Discovery management case study, a competitive analysis of an episode of Pawn Stars, and a capstone team stock analysis and presentation, students at RSBI also take field trips to companies, including underwriter Bank of America Merrill Lynch, corporate sponsor ConocoPhillips (a sponsor since day one), Reliant Stadium (home of corporate sponsor McNair Foundation/Houston Texans), and the Federal Reserve. By Weezie Mackey In January, over a buffet dinner at the Jones School, the Rice Summer Business Institute (RSBI) and its graduates, families, teachers and corporate friends celebrated the start of the tenth year of introducing ambitious high-school students from low- and moderateincome communities to the world of business. For two weeks every June, the program brings rising juniors and seniors from Houston high schools — Chinquapin, Davis, Harmony, KIPP, Reagan, Sam Houston, Wheatley, Yates, YES Prep — to the Jones School for firsthand exposure to the fundamentals of business, finance and energy. Rahsaan King, a Harvard freshman studying economics, statistics and social studies, participated in RSBI as both student in 2012 and teaching assistant in 2013. He has done non-profit work with inner city Houston students and is now founder and CEO of Students of Strength, a network of scholars from top tier universities who serve as mentors, tutors and academic support systems for struggling middle and high school students. “The Rice Summer Business Institute gave me the formal training and experience that prepared me to pursue my passion for social entrepreneurship.” King introduced the evening’s keynote speaker, Jamey Rootes, president of the Houston Texans, who spoke about adversity, how to face a challenge and how to sustain success. His four points to staying on track were to stay humble, stay focused, stay balanced and keep going. “The path to realizing your potential lies with those four points,” Rootes said. “You all have incredible capacity for success.” 34 // JONES JOURNAL SPRING 2014 With strong support from Jones School alumni from the beginning that continues today, the program’s most visible impact is still focused on the students, according to Foote. “To watch the kids’ horizons expand — it’s extraordinary. Because of the summer business institute, they’re able to visualize what is possible for them. Our sponsors, our schools, even our faculty — everyone is changed by this program.” Lessons learned RSBI Class of 2009 visiting ConocoPhillips Beginnings Back in the summer of 2002, as the construction of McNair Hall was completed, Professor Barbara Ostdiek gave a tour of the El Paso Corporation Finance Center. The former academic director of the center and present senior associate dean of degree programs and associate professor of finance explained to a group from El Paso Corporation Foundation, the major funder, how the center would be used for MBA students — integrating finance curriculum such as the student-run M.A. Wright Fund, on-going training, and extra-curricular activities such as trading simulations. As part of her role as chair of the committee that designed and launched the finance center, Ostdiek was tasked with imagining an expanded scope for the finance center. She had a few ideas. For starters, the space would sit vacant over summer if it were used only for MBA-related curriculum and activities. With long-term business education in mind, she also felt a segment of the population — low- and moderateincome communities — were not being addressed, and she knew Houston had the talent to increase the diversity of the applicant pool interested in and prepared for an MBA. While growing up in small town, Middle America, she had had little exposure to business and knew little of the many avenues for careers in business. Was there a way to address use of the finance center and diversity of future MBAs while targeting the business education of a younger set of students? She mentioned her ideas during her tour with the El Paso Corporation Foundation, and it was met with great interest. At the time, the foundation was heavily involved with Project GRAD, the nation’s largest college access program for students in lowincome areas. The foundation associates suggested that Project GRAD might be a good place to start. And so it was. With support and direction from Project GRAD; Dr. Jill Foote (Rice ’87), senior lecturer in finance and director of the finance center; and a hand-picked advisory committee, the Rice Summer Business Institute opened its doors in 2004. Testimonials from former students bring the real message to the people — a room full of family, friends, faculty and graduates of RSBI. Rudy Ramirez, a 2006 RSBI graduate, formerly with JP Morgan Chase now in investment banking with Key Bank, said, “I grew up in the Fifth Ward. Going to RSBI motivated me to pursue finance and business. It made me realize I could do this.” Paloma Mendoza, a 2011 RSBI graduate who came back in 2012 as a teaching assistant, studies civil engineering at Vanderbilt. “I learned you don’t have to be over 30 to be a leader; networking is important in a career; and that I could be a successful professional.” Kierra Lee, a 2008 RSBI graduate and 2009 teaching assistant, who had, days earlier, graduated cum laude from Texas A&M, said with resounding emotion, “RSBI was a foundation for me to see my potential.” Now that Dr. Foote and James Lenz ’07, associate director of the finance center, have tracked down many of the RSBI alumni, they’re looking forward to celebrating the students’ success stories for years to come, especially the first RSBI graduate who comes full circle as a Rice MBA. Gaining perspective Today and tomorrow When Jill Foote, executive director of RSBI, looks back, she can’t believe it’s been 10 years or that four former RSBI students are now enrolled at Rice as undergraduates — and one, Hector Alvarenga, is a business minor. “These students have been able to accomplish amazing things. They have tremendous attitudes. It makes you realize what’s important in life.” During a recent recruiting visit to Yates High School, 10 prospective applicants sit knee to knee on a long couch and listen to an RSBI pitch from Lenz. They ask questions about public speaking and how they’ll have to dress. They ask if there will be homework. And then one student asks, “What’s an MBA?” A gentle reminder of Ostdiek’s inspiration — there are a lot of young people, including herself at one time, who know little about business and business education. Along with a venture capital new business ‘pitch competition,’ a sports The companies involved as sponsors of RSBI understand this, and they understand that their long-term commitment can transform lives. Dennis Albrecht, COO global commodities at Bank of America Merrill Lynch, has been involved from the beginning. “We heavily recruit MBAs from Rice. There came a time when we asked how do we become more deeply involved with the Jones School?” RSBI was the perfect answer. “You can tell these students are high achievers. What better way than to support a program that teaches at the high school level?” Long-term commitment indeed. “Bank of America supports RSBI because we know that the experience can be transformative for the participating students – many of whom have little history in their families of going to college or entering a business field,” says David Ruiz, senior vice president, market manager, marketing and corporate affairs at Bank of America. “I had a high school chemistry teacher in south Texas who encouraged me to attend a summer chemistry program at Prairie View A&M, and it had a tremendously positive impact on my life. I know that the RSBI students are similarly being exposed to classes, professors and the campus of one of the nation’s finest institutions. RSBI and partner programs like Project GRAD help address the need to prepare more of our public school students for careers they might not consider otherwise.” Fran Vallejo ’96 echoes the sentiment. The vice president and treasurer of ConocoPhillips was invited to join the advisory committee in the early stages because of her active role as an alumna and her position with a company known for its commitment to education and employee volunteerism. With both monetary and programmatic support from ConocoPhillips, RSBI found its wings. Two summers ago, Vallejo hosted a field trip to ConocoPhillips. RSBI students learned about the energy value chain, careers in the oil and gas industry and that there is a Fortune 50 company headquartered in the city where they live. During that event, Vallejo had a conversation over lunch with Melida Perez-Errasquin. “I told her about a summer program at Colorado School of Mines — my undergraduate alma mater — for multicultural high school students who want to learn more about science and engineering. Last summer I got an email from her saying she was at the program and loving it.” Vallejo still gets excited talking about it. “I can’t believe something I said made that type of impact. Maybe she’ll go to college there or maybe she’ll pursue a degree in engineering or the sciences. We need more diverse young people to pursue technical degrees.” That enthusiasm reveals itself in everyone connected to RSBI, from the graduates and their parents to the Jones School faculty and corporate sponsors. When Texans President Jamey Rootes said, “Any time anything happens for a decade, that’s a big deal. You can call it a success.” RSBI and its staff are looking now to the future, how to expand and improve so that the next 10 years have that same capacity for greatness. SPRING 2014 JONES JOURNAL // 35 Perspectives Perspectives Walking Across Houston By Erik Dane Assistant Professor of Management Yesterday evening, I walked from the Kelvin Arms pub in Rice Village to my apartment in Midtown. It took me about an hour and a half, and that included a few quick stops along the way. I followed a course that led me past the Rothko Chapel, which I reached in the waning light of dusk. Further along, I ducked into The Hay Merchant and Niko Niko’s – each too crowded for a brew or a bite. So I walked the rest of the way to my building at Bagby and Webster, kicked off my shoes, sat back, and tried to figure out why I felt so good. Houston’s a car town and the traffic patterns show it. During rush hour, the standstills extend in all directions from the city’s core. The numbers 45, 59, 288, 290 and 610 carry unique meaning here and their connotations are unsettling. Of course, traffic oppresses on surface roads, too. Downtown, Upper Kirby, Texas Medical Center...epicenters of congestion spewing emissions and discharges. Bad traffic begets an unfortunate irony. The worse traffic gets, the less viable walking seems. Who among us would consider strolling along Westheimer to the Galleria? Or jaunting on foot through Greenway Plaza? We bemoan high traffic but the very presence of it resigns us to the view that there’s no alternative to getting around. We sit in traffic and watch cars encircle us more densely than ever. In a town fueled by oil and gas, it’s easy to spin this as “good for business.” Yet this masks an uncomfortable fact: Houstonians are beholden to the driver’s wheel. But here I am, walking, mentally retracing my steps from last night. The sky is clear. 36 // JONES JOURNAL SPRING 2014 The temperature is perfect. That’s what led me to cut short my attendance at the happy hour with my Rice colleagues. No agenda; I just felt like walking and appreciating the evening. I’m wearing jeans, running shoes and a jacket. There’s nowhere I need to be tonight. And with my flanked by behemoth live oaks framing the Menil Collection, and suddenly, as intended, I’ve arrived at the Rothko Chapel. Look closely. The stark exterior holds up well against the darkening sky. It’s silent out here. Just look and be still. Look a little longer. Remember this. I’m walking down Fairview now, having opted out of both dinner and drinks. My walk is fueling itself and I’ve no desire to sit. Night’s arrival is punctuated by mellow lights emanating from Boheme and Cuchara. The sights and sounds of the street coalesce and I’m inebriated on the city’s breath. Back in my apartment, I’m trying to figure out why I feel so good. No use being too analytical, I figure. Better to stay right here, in the moment. "It’s not that we don’t think we need mass transit. It’s not that we love traffic jams. But face it, having your own ride is deeply ingrained in our culture." Houstonia Magazine, “250 Reasons to Love Houston” wife out of town, no one’s waiting up for me. So yes, here I am. Walking. Actually, I’m gliding. In late evening hues, these neighborhoods are sliding past me at an unfamiliar but delightful pace. I don’t see any other pedestrians along these streets, but the residents show little surprise as I slip by. The moment. That’s just it; why I’m so enamored with this evening. In a town expanding unabashedly and aggressively, there are moments between glances that get lost. There’s a soft underside here, worthy of embrace. It can only be seen though at the right speed. It can only be held by connecting with the moment. My glide transitions to a more measured step as I travel north on Greenbriar toward the Southwest Freeway. I navigate traffic, trek under the 59 underpass, and continue ahead, passing Freebirds on my left and the 59 Diner on my right. Walking, it seems, can be gateway to mindfulness — a psychological state in which attention is focused on present moment events. Through my research, I study mindfulness in the workplace, but there’s nothing quite like experiencing this state personally. Having crossed Shepherd, I’m back in a residential neighborhood and serenity reestablishes itself. After a few simple lefts and rights, I’m proceeding down Richmond, past Maria Selma and Lucky Burger. As I turn northward, I’m soon I wish everyone could experience the pleasure of a mindful walk across town and perhaps in time they will. But for now, Houston and I are alone and complicitous. As a partner for the evening, I couldn’t ask for more. Keep Houston Funky Erik Dane's path through Houston Barbara Ostdiek's Funky Houston Tour When family and friends visit from out of town, Senior Associate Dean of Degree Programs Barbara Ostdiek; her husband Don, Rice associate dean of undergraduates; and their three sons like to show off the places in Houston that make the city unique. “We want to share its funky side,” Ostdiek said. Over the years, they have accumulated their favorite destinations and share them below. 1 Williams Tower and the "Waterwall" 4 Winter Street Studios 7 Discovery Green “The overall visual and auditory effect is incredible. Watching a single drop of water travel from top to bottom is mesmerizing.” uptown-houston.com “Winter Street and other entrepreneurial art spaces are contributing to a thriving Houston art scene. We are keeping our homegrown talent in the city and we are seeing a steady stream of artists moving to Houston to capitalize on the momentum in our market. Taft McWhorter and Chris Silkwood are family favorites at Winter Street.” facebook.com/winterstreetstudios “A great addition to downtown Houston. Perfect place to stop for a treat before finishing up the tour.” discoverygreen.com 2 Beer Can House “This is essentially a time capsule of this man’s performance art, played out over a lifetime. Be sure to watch the video; it is priceless. My favorite line is Mr. Milkovisch’s observation that he doesn’t know what all the fuss is about; he ‘wouldn’t walk a block out of the way’ to see this house.” beercanhouse.org 3 ArtCar Museum “The Houston Art Car Parade is an institution that celebrates not only our city’s creative bent but also our entrepreneurial spirit. Go to the museum. Don’t miss the parade.” artcarmuseum.com 5 David Adickes Sculpturworx Studio “Presidents' heads. The Beatles. This is indescribable. You really just have to go see it. David Adickes is a Houston treasure.” 2500 Summer Street 6 "Mount Rush Hour" “They are easy to miss if you aren’t looking. If you are looking, they are a wonderful bit of serendipity. Thanks, David.” 1400 Elder Street 8 The Orange Show “Mr. McKissak’s vision was to celebrate the two things he loved most: the orange and Houston. Really. He hoped his ‘Orange Show’ would do for Houston what Disney did for Orlando. Truly.” orangeshow.org 9 The James Turrell Skyspace at Rice University “Make it here at sunset and you have the perfect ending to a funky day. One last bit of creative juxtaposition playing with our perception of reality.” skyspace.rice.edu SPRING 2014 JONES JOURNAL // 37 Perspectives Resources By Bill Arnold Professor in the Practice of Energy Management “How long do you plan to stay in the UK?” the immigration officer at Heathrow Airport asked. “Five days,” I replied. “And what will you do here?” “I am giving two presentations.” “On what subject?” “Energy.” “Well, you know there is a huge debate going on here about fracking.” She paused and looked at me directly. “Which side are you on?” There was a long pause after I responded but she let me pass through. Energy is a hot topic The European Union (EU) is drifting in a very different direction from the United States on energy policy matters. This is concerning both politically and economically – and not just given the current crisis in Ukraine and Europe's dependence on Russian gas. Europe promoted a transition from fossil fuels to renewables through subsidies, mandates and cap-and-trade. The U.S. could be said to have had no energy policy — yet we seem to be on a winning track. “You know our policy by what we do,” said a former official privately. But the U.S.'s winning track is anything but solid and gives us no reason to feel superior. The continental drift should pose mutual distress to both sides. It has become clear that the European approach has been unable to deal effectively with dramatic changes. It struggles to reconcile the irreconcilable. 38 // JONES JOURNAL SPRING 2014 A pillar of their efforts, a cap and trade program, floundered. Carbon prices were too low to have impact. Germany, which heavily subsidized renewables, shut in much of its nuclear power capacity following Fukushima. But the inability to ramp up solar and wind resulted in increases in coal imports from the U.S. Across Europe some 50,000 megawatts of gas-fired power capacity has been closed because of the high cost of imported natural gas. Contrary to plan, carbon dioxide emissions have grown. In Britain, as I experienced with the immigration official, energy is a hot topic among the general public. The UK has had limited experience with fracking, but a lot of people strongly oppose it. The UK shut gas-fired power plants, including the 20-year-old, 2000-megawatt Teeside project that set Enron on a global march to build combined cycle power plants. Britain now literally imports “coal to Newcastle." It’s no longer a punch line by British comedians. Challenges that lie ahead The U.S. has been unable to agree on an energy policy for decades. However, the U.S. has been at the forefront of technological development, drilling deeper and deeper in the Gulf of Mexico, creating 3-D seismic imaging and perfecting drilling techniques. Houston entrepreneurs like George Put simply, it has the potential to turn around the U.S. economy for years to come with high-paying jobs; stronger balance of trade, payments and dollar; and industrial competitiveness built on natural gas that costs much less than in Europe or Asia. An unexpected bonus — in 2012 U.S. carbon dioxide emissions shrunk to the lowest level in two decades as power plants shifted away from coal. Natural gas, rather than renewables, became the main bridge to a lower carbon future. Europe is now focused on industrial competitiveness. But how can they hold onto energy-intensive industries ranging from petrochemicals to steel and glass, when natural gas costs three times as much as in the U.S., and industry is also burdened by higher wages and related social costs? How reliable are their imports of natural gas, considering that a previous dispute between Russia and Ukraine caused a suspension of pipeline shipments? Abundant shale resources are available in Poland and the U.K., but the institutional structure and infrastructure is wanting. With only one liquefied natural gas (LNG) export terminal under construction in the U.S., and a relatively small number of others permitted, it would be years before U.S. natural gas could support Europe’s energy security. And the reshaping of the American economy is not a given. Many challenges lie ahead that will require political realism and leadership to complement the private sector. These would include: • Access to federal lands. Leases issued by the Bureau of Land Management under the Obama administration have been less than 25 percent of those issued during the Reagan administration. • Additional infrastructure. Though the U.S. already has hundreds of thousands of miles of pipelines operating safely, more are needed. Some are high profile, such as the Keystone XL pipeline’s northern section from Canada. Others would make more natural gas available to consumers in the Northeast, who experienced price hikes as high as $80/ MM BTU in December (compared with a spike to $8/MM BTU at Henry Hub in Louisiana). Other pipelines would carry new oil production from the Bakken field in North Dakota to end-users without the risks associated with rail transport. • More flexibility in the permitting of LNG exports. The secretary of energy recently suggested new approaches are necessary. This may bring to a head the debates between gas producers and energy-intensive U.S. industry about the impact on prices, as well as between producers and environmentalists who are concerned about the economic viability of renewables. • Investment in refining. Tens of billions (or more) may be needed to comply with regulations and to process the lighter crudes now being produced in the U.S. • The export of oil. This was generally prohibited when our energy security was threatened by declining domestic production and embargoes. While “energy independence” sounds appealing, we will be more, not less, secure when we both export and import with reliable partners, guided by competitive markets. The future strength of the U.S.'s and EU's economies are linked to our energy security. So, too, is our ability to forge a unified political response to a crisis like that in Ukraine. Europe’s energy vulnerability impacts America’s freedom of action, as well. This needs to be addressed by those who hope to lead us in Washington, D.C., and in capital cities across Europe. Events Calendar Dinh Q. Le, Crossing the Farther Shore Continental Drift Mitchell spent years and huge sums of money to find the right combination of fracking fluids and drilling techniques to make shale commercially viable. The private ownership of mineral rights provided access; the massive energy infrastructure enabled a quick ramp up in production. Underestimated in the first years, the shale play now resounds around the world. APRIL 10-AUGUST 28 MAY 26 Crossing the Farther Shore Break Out Arts MAY 16 Free Press Summer Fest 1:00 pm Tudor Fieldhouse Reception: McNair Hall, The Jones School’s annual ceremony that honors the graduating classes of MBAs and formally invests graduates with their master’s hood. business.rice.edu/investiture JULY 4 Rice University Art Gallery The Rice Gallery's latest installation is the work of acclaimed contemporary artist, Dinh Q. Lê. Crossing the Farther Shore uses photography to depict the complex political and cultural history of Vietnam. ricegallery.org Jones Graduate School of Business Investiture Doctoral Hooding Ceremony 3:00 pm Stude Concert Hall Rice University's annual ceremony includes two Jones School Ph.D.s. MAY 17 Rice University 101st Commencement 9:00 am Academic Quadrangle Dr. Helene Gayle, president of CARE USA, will give the commencement address. rice.edu/commencement 2:00 pm 2521 Holman, Houston Join Project Row Houses for a multi dimensional creative event featuring talented music artists, a fashion showcase and visual arts gallery. projectrowhouses.org MAY 31-JUNE 1 Eleanor Tinsley Park 500 Allen Pkwy., Houston Free Press Summer Fest is back for its sixth year with more than one hundred bands, food and drinks, regional art, and interactive experiences. Headliners include Jack White and Vampire Weekend. fpsf.com A Star Spangled Salute 8:30 pm Miller Outdoor Theatre 6000 Hermann Park Dr., Houston Celebrate Independence Day with a performace of patriotic American music by the Houston Symphony and make sure to stick around for a magnificent fireworks display following the show. milleroutdoortheatre.com SPRING 2014 JONES JOURNAL // 39 Resources JGSB Online business.rice.edu Last Look facebook.com/ricemba twitter.com/ricemba Check out the detailed bios of all JGSAA 2013-14 officers and board members, including President Bo Bothe ’05 and President-Elect Jay Hawthorn ’05. business.rice.edu/jgsaa_board Did you know? You can see every elective available, register for Exec Ed classes, search for alumni and check for upcoming Jones School events online. business.rice.edu The Jones Corporate Investors Program provide corporations with many ways to become involved with the Jones School, tailoring each contribution to be the most productive and mutually rewarding for both the school and the investor. business.rice.edu/corporate_investors Jones Partners open doors to partnership among Houston business leaders and Jones School communities. They also present a compelling speaker series, pairing JGSB professors with business leaders, including Garrett Boone, co-founder and chairman emeritus, The Container Store, Inc.; Ali Moshiri, president, Chevron Africa and Latin America Exploration and Production Company; and Bill Maloney, executive vice president, Development and Production North America, Statoil. business.rice.edu/jonespartners Nelson Mandela Rubik's Cube Mural, Rice Cube Club, BioScience Research Collaborative at Rice University The Rice MBA admissions blog has program information, admissions tips, Jones School news, as well as student and alumni bloggers sharing their experiences at the Jones School. riceMBAadmissions.com “It always seems impossible until it's done.” From OwlSpark Pitch Day to faculty research, student and alumni stories, the homepage hosts a fresh rotation of articles each month. Click on News and Noteworthy to see what you’ve missed in the archives. business.rice.edu Looking for Class Notes? We’ve moved them to our Facebook page! Join the alumni group, and check out the Class Notes Album to see up-to-the-minute alumni news, including all the baby photos you can handle. business.rice.edu/alumnifb 40 // JONES JOURNAL SPRING 2014 – nelson mandela nonprofit organization us postage paid P.O. Box 2932 Houston, Texas 77252-2932 permit #7549 houston, texas