p.2 6 I n terv iew w i t h TO RY B U R C H Chairman, CEO & Designer o f TO RY B U R C H
p. 2 8 Career Choice with the Greater Good in Mind A N U N D E R GR A DUATE’ S G UI D E
p. 31 Ethics in Business TH E INS IDER’ S P ERS P EC TIVE
p. 58 In ter v iew w ith M EL ANIE WHE LA N : C EO of S O U LCYC L E
WORDS FROM THE
n the immediate aftermath of a historic election, we are only certain of uncertainty. The past 18 months of campaigning have served as a catalyst for re-examining our society and our roles within it. At Business Today, the election has lent new importance to this issue of the Business Today magazine, centered around corporate citizenship. Individuals and businesses must now, more than ever, consider the ethical frameworks within which they operate to make sure that they are constantly aware of the different ways in which they are creating impact in broader contexts than just their immediate remit. In this issue our writers examine the idea of ethics in business through many different lenses. One idea that recurs in many of our articles and interviews is that business ethics are inextricably linked to individual ethics. The values that are important to individual actors contribute to creating certain kinds of cultures in the workplace. And it is culture which dictates the tone of the workplace and informs what values drive an organisation. As college students, many of us are preparing to transition into the corporate world in the next few years. It is at this point in our lives that we must take the time to reflect upon the kind of work that we want to do in the future. What will we find most fulfilling and meaningful? In an article about such choices, one of our writers talks to Princeton professor, Peter Singer, about how we can best go about making a positive impact in our chosen career. We further think about ethics in this evolving world through examining corporate responsibility related to information. Knowledge has always been power, but with companies gaining access to an increasing amount of personal data, this statement is taking on a radically new meaning. Companies now know more about us, our lives, and our habits than ever before. Our writers grapple with the ramifications of relatively new technologies that college students and many others use every day, such as the Fitbit. We are still at the stage where conversations surrounding what is ethical with regard to our information are ongoing. Our generation will be responsible to a large extent for defining the ethics surrounding data and privacy and so it is imperative we understand this space deeply. This issue of Business Today poses many open-ended questions and we will not have answers to all of them by the time that we graduate and enter the workplace. However, it is incumbent upon us to start thinking about them as we are responsible for furthering the conversation around them among our peers. In this time of change and uncertainty, it falls to each one of us to take responsibility for what is happening around us. In this age of information, it is our duty to make informed decisions, to have opinions that are grounded in our fundamental beliefs and to make sure that we do not compromise our values. This will not only prepare us to become better future corporate citizens but also simply better citizens of the societies in which we live and better members of the communities of which we are a part.
AYESHA AHMED EDITOR-IN-CHIEF
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The BT Team
Business Today is Americaâ€™s largest student-run publication. Published at Princeton University, the magazine is distributed at over thirty of the top schools in the country and has extensive online readership at our website, www.businesstoday.org. Business Today is dedicated to presenting the opinions of students and business leaders. By examining controversial issues facing our world and exploring life after college, we hope to help readers prepare for their futures. The magazine has been published by Princeton University undergraduates since 1968. KELLY ZHOU President CHANDLER STERLING Director of Strategy AYESHA AHMED Editor-in-Chief of Magazine JAMIE DOWNEY Editor-in-Chief of Online Journal PAUL KIGAWA International Conference Director PETER HOLT Startup Conference and Investments Director COLLEEN KANG Women in Business Conference Director EMILY SPEYER Seminar Series Director NATALIA PERINA Director of Membership & Outreach WAQARUL ISLAM Director of Web,Tech & Analytics MIHIKA KAPOOR Director of Design ANTIGONE VALEN Director of Finance & Corporate Contacts DAVID CRANE Director of Executive Relations SHEFALI JAIN Director of Operations
Business Today Princeton University 48 University Place Princeton, NJ 08540 609.258.1111 magazine@businesstoday.
Business Today is a publication of the Foundation for Student Communication, Inc.. FSC, a 501(c) (3) non-profit foundation, is run entirely by students for students at Princeton University. In addition to the magazine, FSC sponsors International and Regional Conferences held across the country that bring together students and executives to discuss the future of business. For more information, visit our website, www.businesstoday.org.
Photo by Amanda Morrison
AYESHA AHMED Editor-in-Chief of Magazine ANNA POUSCHINE Executive Editor of Magazine JAMIE DOWNEY Editor-in-Chief of Online Journal ISABEL CASSERLEY Executive Editor of Online Journal MIHIKA KAPOOR Director of Design ELAINE FANG Executive Editor of Design SOPHIE HELMERS Magazine Business Manager MORGAN BREWTON-JOHNSON GRACE CORDSEN MELISSA FULENWIDER VICTOIRE HAYEK SOPHIE HELMERS WILLIAM LIU
Maha Al Fahim Bhaamati Borkhetaria Lilly Chadwick Ricardo Diaz Jarred Felix Connor Fitzpatrick Rebecca Fleming Olivia Grah Betty Liu Mo Luo Daphne Mandel Anna Marsh Chance Melancon Audrey Ou Rahi Patel Devin Plumb Andrew Scott Isabel Shipman Gladys Teng Angela Wang
Design Jenna Barancik Hyunnew Choi
Annie Klosowicz Linda Luo Sonia Murthy Aria Wong Lillian Wu
Cover design by Mihika Kapoor
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A D B LO C KE R S : The Gate Keepers to Consumers or the End of Free Media? p.13
ENSURING ACCO U N TA B I LI T Y How “Coding Boot Camps” Advertise Success p.16
H OW C A N ONE WA L K TH E L INE From Savvy Shopper to Community Advocate p. 24
The Decline of Privacy in the Era of BIG DATA p. 50
AK- 47 How 70 Years of Strategic Positioning Crafted the Ultimate Killing Machine p. 54
I n te r v i ew w i t h TORY BU RC H Chairman, CEO & Designer o f TO RY BU RC H p. 2 6
Career Choice with the Greater Good in Mind A N U NDERG RADUATE’ S GU IDE p. 28
Ethics in Business T HE INS IDER’ S P ERS P EC TIVE p. 31 Ethical D IVESTM ENT p. 42 I n ter v iew wit h BIL L ROG ERS Chairman & CEO o f S U NTRU ST p. 46
I nte r v iew wit h DAV I D DROGA Founder & Creative Chairman of DROGA5 p.8
The Controversy Over C R UE LT Y FREE p. 2 2
BT Bit s : TH E G I V I N G P L E DGE p. 6
COPYING & PASTING In Fast Fashion: Just the Sellers’ Fault? p. 2 0
TA B L E
In ter v iew wi th M EL ANIE WHE LA N : C EO of S OU LCYC LE p. 58 M ODERN ME D ICIN E Or M od er n Busi ne ss p. 62 In ter v iew wi th VIC TO RIA LYN D E N : C EO of KOH ANA COF F E E p. 64 BEYOND TRACKIN G p. 68
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of the world’s wealthiest people from 16 countries have now signed the Giving Pledge. The Giving Pledge is a public commitment by billionaires, or those who would be billionaires if not for their philanthropic contributions, to donate the majority of their wealth over their lifetimes to address the world’s most pressing problems. Over $365 billion has already been pledged out of a combined net worth of $731 billion. Here is where this money is going:
BILL & MELINDA GATES Co-founders of the Giving Pledge along with Warren Buffett, they dedicate their effort to running the Bill and Melinda Gates Foundation which is the largest private foundation in the world. With an endowment over $44.3 Billion, the Foundation primarily focuses on issues of healthcare and extreme poverty around the world based on the fundamental principal that all lives have equal value. Their projects range from accelerating the global decline of AIDS and connecting the global poor with digitally based financial services, to investing over $1 billion in Washington State to ensure a quality education for all children, reduce family homelessness, and support the most vulnerable families in the state.”
The Giving Pledge by Morgan Brewton-Johnson 6
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STRIVE & TSITSI MASIYIWA Zimbabwean founder of telecom conglomerate Econet Wireless, Strive Masiyiwa was named one of Fortune Magazine’s 50 most influential business leaders in the world. In 2012, he attended the G8 Summit at Camp David to advise President Obama on increasing food production and ending poverty in parts of Africa. Through their Higherlife Foundation, Strive and his wife, Tsitsi, have provided over 250,000 scholarships to orphaned and vulnerable children across Africa. They aim to increase access to education, improve the quality of education received, and provide opportunities for lifelong development to 2 million African scholars by 2020.
DAVID ROCKEFELLER Rockefeller has focused his diverse philanthropic efforts on education, arts and culture, global development, and the environment. He has donated to large institutions including Harvard University, The Rhode Island School for Design, and the Museum of Modern Art. Internationally, he’s pledged $225 million to improving access to healthcare, reducing poverty, promoting sustainable development, and creating dialogue between Muslim countries and the West. In celebration of his 100th birthday, Rockefeller donated 1,000 acres of land in Maine to the nonprofit organization, Land & Garden Reserve.
ELON MUSK The current CEO of SpaceX and Tesla Motors has focused his charitable contributions largely on energy and technology. Through his company Solar City he has donated a number of solar power systems to areas hit by disaster. For example, after the tsunami disabled the power supply to the nuclear plant in Fukushima, Japan, resulting in a nuclear disaster. Musk also co-founded a $1 billion research institute focused on building safe Artificial Intelligence and ensuring that AI impact is as “as widely and evenly distributed as possible.”
SARA BLAKELY The first female billionaire to join the Giving Pledge, Spanx founder, Sara Blakely, pledged to direct much of her giving towards women’s empowerment. Philanthropy is an integral part of her company, which has a rotating philanthropy board that allocates a portion of the company’s profits to charitable causes. Through its catalog, Spanx hosts Leg-UP, a free feature of products from other entrepreneurs. Through both Spanx and her own foundation, Blakely has funded scholarships for women, invested in entrepreneurial programs for girls’ schools, and donated $1 million to Oprah Winfrey’s school for girls in South Africa.
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Founder & Creative Chairman
David Droga is an esteemed advertising executive and founder of Droga5, where he has served as creative chairman since 2006. Hailing from an Australian ski resort town, Droga has had a career in advertising that taken him from Sydney to Singapore to London to New York. To date, Droga5 has been named Agency of the Year ten times, most recently by the Cannes Lions International Festival of Creativity, Advertising Age and Creativity. Droga5 is also the only agency to be named in Advertising Age’s A-List over six consecutive years. He currently resides in Manhattan with his wife and four children.
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dvertisers have an important ro I think advertising will have to nd say we’re a crucial part of so rewarding... The nature of this ot scared of controversy or fric intersection of everything and ue to the demands of clients, te society as much as corporate ci Paul Kigawa: Growing up in Australia, you never went to university. Can you tell us about your decision to go straight into advertising? David Droga: When I look back at that time – many years have past since I have made that decision – I feel like my brothers didn’t know what they wanted to do in high school. I already knew I wanted to be a writer. Maybe my decision was because I was the fifth son and always had to be patient, with being the last in line and inheriting handme-downs. So, I wanted to move faster. I didn’t understand how University would make me any better. I had an idea that I wanted to be a writer – I didn’t care if I was a journalist, playwright, novelist or whatever. And then someone suggested advertising (I grew up in a national park in Australia about as far from the business world as anything.) He said that you can use your imagination in your writing and people will realize your ideas with other people’s money. I thought it sounded amazing. In my family, education is a major part of our lives – it was always expected that we would all go to college. My brothers were successful at school and got scholarships – there was never a conversation about whether I was or wasn’t going to go. I deferred college; I was never planning on going, but I kept it as a safety net. Advertising might be one of the few professions where you can get away without college. I just wanted to get to it and to try and hit the road running. I missed the social side of college, which I still beat myself up about. But I didn’t see why college would add any value for me, personally. Chris Ratsimbazafy-Da Silva: Do you have any advice for college students who are interested in pursuing advertising? How can daydreamers break into the field? DD: You don’t know what advertising is like until you’re on the inside. Advertising has a
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bad reputation: the majority of stuff you see as a non-advertising person is the stuff that you don’t want to see – the stuff that interrupts and bombards you. At its pinnacle, great advertising is very influential, entertaining, informative, and powerful. Advertising doesn’t have to be a heavy-handed, disruptive, aggressive thing – it can actually be beautiful and fun. Advertisers have an important role in society – I won’t overstep and say we’re a crucial part of society – but it is fundamental. The majority of the general public hates advertising until they have to sell their car or market their startup. I enjoy the dynamics and dimensions and opportunities with advertising – it is an amazing career in
I enjoy the dynamics and dimensions and opportunities with advertising. the sense that you can be involved in almost every other industry whether it’s politics, tech or entertainment. They all need advertising. Everyone needs better communication. Even a college campus presentation is trying to get peoples’ attention. PK: Droga5 is one of the most creative advertising industries out there and you have talked about always looking around the corner to see what’s next – how do you weigh that with lessons learned from past mistakes? Do you look back at all at old trends or ideas? DD: Whatever is working for us now doesn’t guarantee anything moving forward. It’s a fast moving industry due to the demands of clients, technology and consumers. We
spend less time dwelling on what worked for us beforehand – even though there are lessons to be learned from successes and failures – and stay in search of the new. The most honest thing we ask ourselves is why would anyone care about what we create and what purpose does it serve? With that mentality, your creations aren’t disposable or pollution; instead, you create things that will be effective and resonate with people. We’ve grown a lot as an agency. Someone once noticed that athletes keep the same haircut from their best year. I don’t want to be a company that thinks its hit a formula and tries to stick to it. That’s when you become dated. We are very forward facing – sometimes we’re springing forward and sometimes we’re falling forward – but we use that momentum to stay on our toes. There’s always competition, there’s always new talent – you have to be progressing to move forward. CR-DS: You have said in the past that “90% of advertising is pollution.” Can you elaborate on that? How has Droga5 “cleaned up” that mess? DD: I don’t say that to be contentious or controversial. The majority of advertising we see is pop-up ads. Nothing makes me angrier than a pop-up ad. When this style first started, the industry accepted it. That’s why work got worse and worse – marketers were lazy and thought they didn’t have to try anymore because people were forced to watch stuff. Now, people pay extra money to not watch ads or invent technologies to avoid ads. That tells our industry that we have to create ads that are better and more relevant. But when advertising is done well it’s rewarding and informative. People can share it, think about it, build businesses with it or raise awareness. But most advertising is pretty lazy and formulaic. Do you know anyone who actually looks like someone in an ad? Or families that act like families in ads? I’d be scared if my kids acted like kids in ads.
ole in society - I won’t overstep be much more targeted and ociety - but it is fundamental... s industry is that we sit at the ction... It’s a fast moving indust we have to be citizens of echnology and consumers. itizens. I’m making some sweeping generalizations but I’m not negative on advertising; I love the power of advertising. When it’s done well you can move mountains and help elect presidents. But the starting point is figuring out why anyone would care about your message. I don’t think most people who are creating advertising think about that. PK: You’ve done ads for Hillary Clinton and Barack Obama. What problems have you tried to solve through creative design and advertising? DD: The nature of this industry is that we sit at the intersection of everything and we have to be citizens of society as much as corporate citizens. Advertising attracts people who believe their jobs are about more than just money. If you were just interested in money, you would go into banking or real estate. By the nature of who we are, we’re empathetic with what’s going on out there and we want to get involved. As an independent agency, we want and have the privilege to get involved in projects that matter. I don’t just want to be a business that takes. We have the ability to create ideas that hold immense value. It’s very easy to rally people in this agency to get them involved in things that matter. If we tried to put together a campaign for gun control, people would be knocking themselves over to volunteer to help. We want to create work that moves the world in a positive way. We’re also at a time where our agency doesn’t have to choose between succeeding and contributing positive things to the world. My parents’ generation had to make an active choice between being a ‘do-gooder’ volunteer and a ‘capitalist pig’. Now, you don’t have to choose. I’d like to believe more good guys are winning and more bad guys are losing. We strive to get involved in projects that are more than just taking. I don’t feel bad about being in advertising to sell life insurance or sneakers or beer. These things make the world
go round. I just don’t want to do advertising that masks something – I don’t go into the business of smoke and mirrors. But, it’s important for us as citizens to want to contribute when we can contribute. That’s the best anyone can do. CR-DS: How do you pick and choose the companies you want to pitch for? Do you keep in mind past history and controversies? DD: That’s a great question. I’m never going to pretend that we are Mother Teresa. We are, however, more discerning than almost every other agency. It’s flattering when any client wants to hire us but it doesn’t mean
We have to be citizens of society as much as corporate citizens. we have to work with them. If a client that we didn’t believe in was doing things we felt good about, then we’d have a hard talk about it. There have been clients we’ve turned down, but we’re in a privileged position as an agency where we have enough good clients that want to work with us. We are discerning but our primary focus is what the client wants of us, and we know if its bad for the world or masks what they’re actually doing. PK: In terms of controversy, how do you balance your artistic vision with the potential for backlash? Do you embrace controversy or avoid it? DD: I’m not scared of controversy or friction. I am not afraid to pick a fight or stand up for
something that no one agrees with if it’s the right thing to do or if it’s in line with what our or our clients’ beliefs are. I’m not into stirring the pot for a reason you can’t defend. I wouldn’t create a controversy for the sake of it. But I’m also not into everything being vanilla, pedestrian, or mediocre. I feel like everyone’s shaved the edges off their work so it ends up right in the middle. Brands have to have a point of view. If people are spending their time or their money, they want to know what the brand stands for. People loved Nike as a brand, but it was an issue when they realized that the manufacturing processes weren’t in line with their values and those customers forced Nike to change itself. It’s great when that happens. The gap between what a brand says and what it actually does is diminishing. Messages are often very sincere but sometimes they’re manufactured. Ultimately consumers make decisions about what they buy and wear given their own personal values and tastes. You don’t necessarily need to be a conscious consumer; just be a smart person who sees the world. CR-DS: With the aging millennial generation, how do you imagine the advertising landscape changing over the next few years? DD: I think advertising will have to be much more targeted and rewarding. Now, people are facing screens all the time and advertisers have to consider the context in which people are getting messages, not just what the message is. The industry is splitting because of the algorithm of advertising. Sometimes it can be brilliant for knowing what you want and serving you what you want at the right time, but not everything is robotic. The majority of decisions we make are decided by emotions and tastes. I’m operating in the latter camp. Not everything operates in the Facebook or Google way. Stories and narratives make people feel something, and that’s not going away. Technology just makes it more interesting; it provides new opportuni-
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You shouldn’t jump on the Hopefully still relevant and bandwagon just because still contributing. someone invents something. ties and canvases. But just because you can do something doesn’t mean you should do it – you shouldn’t jump on the bandwagon just because someone invents something. PK: In prior interviews, you have said that you want to make Droga5 the smartest advertising agency. In tailoring your message, how do you use data to make your agency as smart as possible?
As long as I have a job that has a creative slant to it and makes a positive social contribution, I’ll feel successful.
DD: Data is basically information you either have in your hands or you can easily get. If you’re in a job interview, you use the data that you sense – you don’t go in there with a robotic speech. Instead, you’re responding to real life information. Data is a lot like real life. If someone tells you something about me before you meet me, you’ll use that to your advantage. Everyone is in advertising to a certain extent. Every time you post on Instagram, you’re projecting a narrative and changing how people think about you. Everyone is the curator of their own domain. Every brand has the same system. What data does do is stop the guessing game. Data doesn’t give you the answer but it provides you with a lot of information and context for when you do come up with something. Some people look to data for a formulaic answer but that’s not going to work because three other people will come up with the same answer. CR-DS: So where do you see yourself ten, twenty, thirty years down the road? What are your hopes and fears about Droga5? DD: Hopefully still relevant and still contributing. Wherever you are and whatever you’re working on, you want to be self-sufficient. Success for me is about options. You have options to do things and you’re never backed in a corner with others dictating what you’re doing. It’s not about how much money or how many houses you have. Instead, you want to have options to do what you love. As long as I have a job that has a creative slant to it and makes a positive social contribution, I’ll feel successful. PK: Could you describe the competition between firms in the advertising industry? Are you planning on keeping Droga5 on the smaller side in terms of scale? DD: Advertising is a trillion-dollar industry
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and a lot of it is subjective. One person’s opinion rarely matches another’s. We’re now considered a mid-size agency in New York – we’re about 650 people, which for a 10 year -old agency is probably the fastest growing agency in the last decade. We probably could have been bigger if we had taken on more accounts. But we do say no, politely, to more projects than we say yes to. We understand this a complete privilege – most agencies don’t have this opportunity – but I also don’t need fifty offices for personal fulfillment. I’m more concerned with the impact we are creating. I would argue that the pound-for-pound impact of our work transcends the age and size we are. I want to extend our reach through collaboration as opposed to just rolling it out like a franchise and accumulating forty or fifty offices. It was controversial when we closed our Sydney office because that’s not in the DNA of our industry. Usually once you have a footprint somewhere you want to keep growing it. As a very independent company, I only want only to have offices that truly live up to who we are. That’s why clients come to us and pay us a premium. That’s the fine line we have to navigate: standing for something and proving it year in and year out. PK: You talked about each brand having its own narrative. What’s the most unique aspect of Droga5 that makes it stand out? DD: We’re always striving. I’m not trying to be the most creative advertiser, because that’s always subjective. I’m trying to be the smartest agency in the world and the most influential. Smart means doing what’s right, not being typecast to have a formula. I don’t want to be the comedy agency or digital agency because every client comes to us with a different problem. Being smart means you have to be strategic and creative. Influence means the advertisements have to work. I want billion dollar clients to work with us, I want to nudge and influence politics, I want to rub up against entertainment, I want young graduates to want to work here. That’s how I want to achieve influence. Again, these are heady, unrealistic goals, but I’d rather have ambitions like those than just aim to be the biggest or most awarded or richest agency. Those are very unsatisfying ambitions. I want to do work that is in perpetual motion and keep striving.
AdBlockers The Gate Keepers to Consumers or the End of Free Media? by Sophie Helmers
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et’s face it: online advertisements can be incredibly annoying. From the perfectly curated yet incredibly distracting shopping pop-ups that interrupt your research to the videos you are forced to endure before streaming any online content, ads are frustrating internet users around the world. Jared Belsky, president of digital marketing agency 360i, notes the magnitude of the problem in an interview with Adweek: “Digital advertising has to be about utility and efficacy versus ubiquity and trickery... The entire industry is predicated on a value exchange where everyone has to win—consumers, brands and publishers. But the pact has been corrupted and diluted lately with too much ubiquitous, and frankly, terrible advertising.” Belsky’s proposed solution—”forcing the industry to have smarter, richer and better” content—is quite a long-term vision. In immediate response to these disturbances, many consumers have instead now turned to adblocking services. Improving the online experience is only one of several tangible benefits provided by adblocking software. In addition to providing a refined aesthetic, the technology can protect users from advertisements containing computer viruses, malware, scripts, and fraudulent messages designed to steal consumers’ private information. Furthermore, according to a 2015 New York Times study of adblockers on iPhones, advertisements are the cause of over half of the data used by the 50 top news websites. This reduction in data usage may also result in much shorter page loading times. Adblockers thus significantly reduce the data consumption of their users, which in turn lowers bills. The benefits of the software are further evidenced by its popularity: there are now 198 million monthly active adblock users around the world, according to the PageFair and Adobe 2015 Ad Blocking Report. Adblocking grew at a rate of 48 percent in the U.S. and 41 percent globally from 2014 to 2015. Even more astounding, according to the 2016 report, is that there are now at least
419 million people worldwide using mobile adblockers. This surge is especially prevalent among lucrative, Asian consumers. According to Brian Kennish of Adblock Fast, the rapid growth of adblockers is due to web advertising run amok. Kennish told Adweek that “the ads that are being shown on the Web have just gone overboard and people don’t want to see them anymore…The fact is that adblockers are going to wherever technology allows them to go.” An August 2016 controversy raised questions about the regulation of the adblocking industry as well as the ethics of its profit-generating mechanism. The Body of European Regulators for Electronic Communications (BEREC) blocked the European wireless carrier Three from partnering with an adblocking startup called Shine—a partnership that would have allowed Three to screen its 30 million subscribers from all advertising. BEREC’s decision was based in the concept of net neutrality, according to which internet service providers must treat all web traffic equally. BEREC ruled that a blanket ban on ads by a service provider is a violation of such neutrality. Adblockers also have notable adverse consequences, particularly on content-based enterprises. The surge in adblockers is progressively choking off the revenue of many online publishers, most of whom generate the bulk of their profit from advertising fees. In its 2015 report, Pagefair estimated that adblocking cost business $5.8 billion in revenue in 2014 and projected $10.7 billion in 2015 and $10.7 billion in 2016. This tremendous loss of revenue has left publishers scrambling. Companies have taken various approaches to combat the steady decrease in revenue: In 2015, Forbes required users to disable adblocks prior to accessing content. 44 percent of the test pool—1.6 million users—turned off adblocking software to view Forbes content. The remaining 64 percent, however, convinced Forbes executives that such a loss in online traffic was not a
viable long-term strategy. Alternatively, other media companies have focused on creating a more appealing interface to deter consumers from employing adblocking software in the first place. These strategies are relatively new, however, so it is unclear how effective this approach will be. Another concern for advertisers is the adblockers’ emerging role as an advertising gatekeeper to a large portion of global consumers. Moreover, adblockers themselves are also searching for revenue streams to continue to offer their services or free. For example, Adblock Plus, serving over half the adblocking market with 60 million users, has pushed advertisers to rely on “acceptable ads.” Rather than traditional platforms and pop-ups, “acceptable ads” are integrated into the content itself, such as puff pieces or further recommendations sections. Furthermore, Adblock requires a fee for a bypass as well as compliance with a set of non-disruptive guidelines. This system essentially erects a wall between advertisers and much of their target audience with all of the power held by Adblock Plus. These bypass payments appear to be the adblocker industry’s main source of revenue, as the software download is typically offered for free. This system allows adblockers to operate as a toll road for all advertisers seeking to reach adblock users. The apparent disadvantage to smaller companies with less capital may be overstated because Adblock Plus claims that it only requires fees from large companies, but the opaque nature of the process raises question of Adblock Plus’ discretion. The two primary ethical issues with this business model are the opacity of its process and the lack of regulation surrounding the nascent industry. For example, the issues begin with ambiguity in the metric that determines which companies are charged to have “acceptable ads.” How does this lack of regulation effect the relationship between adblockers and advertisers, as well as consumer trust with the adblocker?
One grave outcome is effectively disallowing small and mid-size companies from these established means of advertising to reach users who employ adblockers. The arbitrary “large enough” designation could require a company to pay fees that could put a disproportionate burden on smaller companies compared to their competitors. Another concern is disproportionate power in the adblockers to use under-the-table deals to decide which messages are passed to consumers. This potential for the proliferation of pay-to-play activities could then allow adblockers to favor certain special interest groups or large, deep-pocketed corporations.
The two primary ethical issues with this business model are the opacity of its process and the lack of regulation surrounding the nascent industry. The rise in adblockers has generated a sizable debate, in which both sides claim to have the consumer’s best interests at heart. However, whether or not adblockers benefit consumers in the absence of government intervention, seems to be left to market forces to decide. As Faizan Bhat of the Harvard Business Review notes, “As adblockers grow in popularity and ad revenues continue to drop, many websites may face a threat of financial collapse.” Will adblockers mean the end of free online content, or simply the end of net neutrality?
How “Coding Boot Camps” by Jarred Felix
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Advertise Success T
he opportunity seems incredible. In a short period of time, anyone can attain the knowledge of coding, ninety-nine percent of program graduates will get a job, and those jobs promise salaries in the six-figure range. One can have all of this for a small, but steadily growing, payment of $10,000 to $20,000. What has just been described is a new and increasingly popular industry: “coding boot camps.” In an ever-changing economy that is now, more than ever, characterized by technical roles, computer programming is a highly coveted skill. With the help of boot camps a struggling worker can, in the words of President Obama, use these programs as a “ticket to the middle class.” The industry itself has been exploding over the past few years as the price of a traditional college tuition continues to rise. By 2016, a total of 91 full-time coding boot camps existed in the United States, and their total gross revenues equaled around $199 million. While the programs vary in size, their educational promises are quite similar. Their duration can last anywhere from ten weeks to seven months, and the subject material may vary slightly. Galvanize, a largely successful coding boot camp, offers courses in web development, data science, computer engineering, and so on. The Turing School, located in Denver, offers two separate programs, one called “back-end engineering” and the other called “front-end engineering.” Broadly speaking, these courses share the same goal: teach coding. Too Good to Be True? The most significant similarity between coding boot camps across the nation is not their course work, but rather, their advertising. On any boot camp website, you might see numbers that would lead any rational consumer to take the risk. However, the figures described earlier can easily mislead the consumer. Without third party verification, there is no sure way to protect the consumer from misinformation on the investment. And so lies the caveat of the industry - because coding boot
camps are new, all statistics regarding the success of graduates come from the businesses themselves. Third-party accountability measures have yet to be implemented in a standardized system. While members of the industry are, of course, not falsely reporting their success, third parties are needed to ensure advertised statistics are balanced and clearly explained to the consumer. For example, Galvanize reports average salaries for graduates at either $76,000 or $111,000 (depending on the course of study). In fine print, they include that not all salaries are reported. In this way, there is a red flag about selection bias. However, this company-reported statistic will not include the background education of the graduates receiving these salaries. While most coding boot camp students are without substantial post-secondary education, some students already have degrees. A graduate who entered the program with a bachelor’s degree, looking for an opportunity to refine his or her applied skills, is going to yield higher earnings than someone without such an educational background. The ethical implications of a lack of third party accountability extend from this point. Thorough non-biased reports would confirm, or refute, the statistics presented by the companies to protect consumers from misleading information while deciding to invest. If these coding boot camps truly are as successful as they claim to be, then outside reports will only confirm their statistics. In addition, the benefits of external reports are not restricted to only the consumer. Third party accountability and industry-wide standards are beneficial to successful companies as well. Preventing Past Mistakes The benefits of ethical advertising to these coding boot camps are exemplified by the Corinthian Colleges, Inc. scandal. This corporation included a number of non-traditional, for-profit colleges that offered career training and degrees to those who enrolled and paid tuition. For two decades, Corinthian Colleges promised high job placement rates for graduates, and federal loans were provided
FALL 2016 BUSINESS TODAY
The most significant similarity between coding bootcamps across the nation is not their course work, but rather, their advertising.
for the students to meet the growing tuition costs. However, the statistics that the colleges provided to consumers were highly misleading. Job prospects were not as fruitful as promised, and because of that, students began to default on their loans. The financial security that students were expecting did not exist. Towards the end of the company’s operating years, Corinthian Colleges was $143 million in debt. This past March, Kamala Harris, the Attorney General of the state of California, received a massive victory against the corporation on charges of false advertising and lending practices, and as a result, Corinthian Colleges must now pay nearly $1.2 billion in reparations. Although Corinthian Colleges, Inc. was leading more of a scam in its later years, the similarities cannot be more apparent. This is not to say that all, or even any, coding boot camps are actively pursuing fraudulent practices, but it shows the importance of ensuring accuracy in self-reported statistics. As the price of traditional, four-year universities continues to rise and causes many to seek alternative paths to the work force, consumers are under pressure to be more strategic with how they channel their funds. Third party accountability on the success of the programs does not hurt the industry; it merely protects it. If coding boot camps can ensure the success of their graduates, then loans will get repaid, and the consumer will not be committing to a financial scheme that they cannot afford. First Steps Accountability
In 2015, President Obama announced a “Tech Hire Initiative” to get more Americans trained to enter the rapidly developing technology sector. As a part of this initiative, an umbrella organization of coding boot camps called the New Economy Skills Training Association (NESTA) drafted a letter to the president declaring their intention to create a standardized system for third party accountability. As of September 2016, the association has missed its own deadline and continued to lag behind in implementing these important measures. While third party accountability in the industry is lacking as a whole, individual firms have taken steps to be accredited, or at least better protect consumers if the program does not provide what has been advertised. Bloc Coding Boot Camp, for example,
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offers a version of mutual accountability. If graduates from the program do not land a job placement within the first 180 days after graduation, their entire tuition will be refunded. While this initiative is certainly on the right track, there are still notable flaws. Job placement, as defined by Bloc, includes “full-time, contract-to-hire, contractor, and internship positions.” Internship positions, in most cases, do not offer compensation high enough for someone to be able to pay off a $19,500 tuition. Given that Bloc considers internships to be a job placement, graduates who only receive internships are still financially required to cover the costs of a program that they most likely still cannot afford. Some coding programs are going further than Bloc and NESTA, by independently using third parties to verify their reported statistics. The Flatiron School in New York City and the Turing School both presented statistical reports that have been verified by third party firms. However, these third party reports are not doing independent analyses on the outcomes of students who graduate from these programs. Instead, they are ensuring that the companies are using sound statistical and scientific methods in finding and presenting their data. While this undertaking is another step in the right direction, certain misleading aspects of the process, such as how a job placement is described, are still reported solely by the boot camp. The problem for consumers has not been solved, but improvements are slowly being implemented to prevent misleading advertising from continuing. As the economy continues to evolve and technological knowledge becomes more valuable, coding boot camps offer a possible entryway into the workforce. As long as demand for their services increases, consumers must not be misled in the process. The programs are a major investment, especially for those participants who cannot afford a traditional college education. Third party verification of graduates’ success will only benefit the industry. On the consumer side, major loan defaults will be avoided, and those who graduate will be promised clearer job prospects for their future. On the industry side, companies will maintain a level of ethical credibility, better meeting their customers’ expectations. Thus, the industry could evolve into a viable alternative to two or four year universities.
IN FAST FASHION:
JUST THE SELLERS’ FAULT? How knockoffs perpetuate in the fashion industry by Audrey Ou
t’s Monday night and I am browsing the Zara website. I notice a dark grey and pink sweatshirt that looks oddly familiar, though I do not recognize it from prior shopping trips. Regardless, I add it to my cart – it is trendy and I feel that I could get good use out of it. Most Millenials, especially those who shop at ‘ high-street’ brands, have likely felt the same vague recognition that I just described. Kal Raustila, an UCLA law professor, explains: “Knock-offs are everywhere. They’ re almost an accepted part of the reality of this world.”Popular brands such as H&M, Forever 21, and Zara are known to be places where one can procure desirable “knockoffs.” While they maintain a difference from the designer version, the changes are generally barely noticeable: a single stripe slightly moved to the side of a dress, an added heart in another color on the left of the pocket, or a dress with a slightly different inner lining. Mass-market brands are increasingly looking to runways and social media to stay ahead of the competition
regarding trends. Millenials are spending less on apparel, though social media demands a rapid image-sharing rate. As a result, such brands appeal to young customers by quickly producing cheap, mass-market versions of high fashion items. Even unintentionally, many stores ultimately offer similar products in their attempts to capture customer interest. Right now, copying, reproducing, and distributing a designer item is easier and faster than ever before. Often, the item is on the shelves before accusations pertaining to intellectual property rights can be made. However, these pieces usually do not fall into the fashion industry’ s definition of “counterfeits”; instead, they are deemed copycats, resulting in remarkably differentlegal treatment. While there are many laws concerned with the loss of revenue in such cases, few laws exist that focus on protecting the designers’ creativity. Yet, is the decrease in revenue for designer brands the only key issue? What is more concerning is that ‘copying’ intellectual work often lacks consequence. On the one hand, advance-
ments in the fashion industry prove difficult to regulate due to their subjectivity. Designers often offer similar products season by season, and many design patents only protect “novel” designs. As most designers do not invent new fabrics or articles of clothing, these regulations place heavy demands on the form itself. On the other hand, acquiring patents is often too strenuous a process for most designers to carry out. Simply filing a patent can cost upwards of several thousand dollars and takes on average 24 months. Michael Chan, an intellectual property lawyer, usually advises clients in the fashion industry to not to go to court as “the cycle is too fast to do anything.” In his experience, court’s demands of time and capital are more likely to hurt their businesses than the production of the knockoffs. Too often, designers feel powerless in their fight and instead devote themselves to creating their next season. However, some companies have actively taken measures to protect their designs. For example, Lululemon patented 31 items of workout gear, including tank tops, shorts and
yoga pants. However, the extent to which these patents will be enforced remains to be seen. Susan Scafidi, the academic director of the Fashion Law Institute at Fordham University in New York, expresses her hesitation “We’ re not yet sure how valuable design patents are in general...and Lululemon is becoming the test case,” she says. “I think a lot of companies are watching [them] to see how successful they are or aren’ t.” However, this step proved controversial within even the fashion industry. Some see the protection of intellectual property as a step towards encouraging greater creativity through preventing the perpetuation of some designs. Others see the step as an aggressive attempt at monopolizing a particular segment. Questions have arisen over whether Lululemon’ s items are unique enough to warrant a patent. Critics accuse Lululemon of using the patent strategy to grab public attention. Moreover, they voice
34% of people say they are certain they have never purchased imitation goods.
their concerns that such patents will harm the fashion industry by limiting others’ creative choices. In fact, Coco Chanel once remarked, “If you want to be original, be ready to be copied.” While established fashion houses do not see mass-brands’ reproductions as a serious threat, given the differences in quality and customer bases, smaller designers are seriously harmed by copycat designs. In the
As most consumers buy clothes out of desire and not necessity, they appreciate trends more than creative achievement. past year, Zara has been found selling items copied from more than 18 “indie” designers including Tuesday Bassen, while Forever21 has been accused of copying sweatshirts by brands Sporty and Rich and Bow and Drape. New York Magazine goes so far as to liken these designers’ battles to the David and Goliath story. Unlike haute culture conglomerates, young designers lack funds, reputation, and customer loyalty to fight the competition. Therefore, their loss of revenue due to stolen designs is crippling their success. Thus a dangerous cycle emerges – with-
22% of shoppers knowingly buy fake fashion goods.
out sufficient resources, the indie designers “never speak up, perhaps unsure of their legal rights, lacking resources, or simply unwilling to challenge a multi-billion-dollar company,” according to New York Magazine. Accordingly, small designers are using social media to establish their voices. Just as social media has enabled small designers’ promotion, it can also be used to expose copies. Small designer Bassen, for example, only found out that Zara was copying her work through images and emails sent by fans. She quickly found a lawyer and reached out to Zara’ s legal team. Despite her effort and $2,000 in fees, Zara responded with “no apology and no effort to take the case seriously.” Bassen then retaliated by posting an excerpt of Zara’ s reply on Instagram, which stated, “the lack of distinctiveness of your client’ s purported designs makes it very hard to see how a significant part of the population anywhere in the world would associate the signs with Tuesday Bassen.” Public outcry followed. A few months later, Zara’ s parent company released the statement, “Inditex has the utmost respect for the individual creativity of all artists and designers and takes all claims concerning third party intellectual property rights very seriously. Inditex was recently contacted by the lawyers of artist Tuesday Bassen...the company immediately opened an investigation into the matter and suspended the relevant items from sale.” Prior to this, the customer’ s role in the matter of legality of copycat designs was almost always disregarded. In the future, perhaps educating customers about the detrimental effect of knockoffs and using social media to expose culprits may benefit the industry. However, realistically, customers will likely continue to purchase cheap, trendy, knockoff clothing. As most consumers buy clothes out of desire and not necessity, they appreciate trends more than creative achievement. As a result, the idea of always giving credit where it is due seems to remain an elusive dream in the fashion industry. 31% of people said they were unaware that the product they purchased was fake.
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The Controversy Over
Cruelty Free by Grace Cordsen
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ost animals to be more ethical than those that may have harmed innocent creatures. The fight against animal testing, particularly in cosmetics, has been going on since as early as 1655 and continues into the present day. While animal testing can speed up a product’s approval process and put it on the shelves faster, it also repels conscious consumers. In the United States, animal testing has become widely stigmatized and most products are cruelty free thanks to the efforts of groups like People for the Ethical Treatment of Animals (PETA) and Cruelty Free International. For the last thirty years, such groups have fought, harnessing the power of public support and celebrity sponsorship, to advance their initiatives and prevent animal testing. Now, on almost any website for a U.S. product are statements along the lines of “We at X-brand are proud of the fact that we are cruelty free and have been an active supporter in the fight against animal testing.” However, the question still remains: How do you define cruelty free? Answering this question proves to be a highly contested issue. At the most basic level, cruelty free means the product was not tested on animals. However, various caveats emerge, especially given differences in global regulations and ethical values. For example, imagine applying a lotion, knowing that the particular product had not gone through animal testing. Would it bother you if the same product was tested on animals abroad before going on sale in a foreign country? Currently, in order for some higher-end cosmetics to be sold in China, the Chinese government requires these products to be tested on animals. However, even in the United States, consumers want to consider the brands’ global impact. Can a brand claim to be cruelty free if it is fully aware that when its products are sent to China, those same products are tested on animals by
the Chinese government? Almost all of the brands that have products tested on animals in China are fighting tirelessly to have those regulations changed. However, from this initiative emerges a rich dialogue on the ethics of “cruelty free” labeling. Animal rights activists argue that since certain brands know of such testing and consent to it, they are not cruelty free. They maintain this position regardless of the fact that these brands are not doing any of the testing themselves. Such activists call for brands to demonstrate commitment to cruelty free products by removing their products from China, or other areas that require animal testing, to achieve the “cruelty free” designation. However, given China’s lucrative market, the issue is complicated from a business perspective. For many brands, a withdrawal from China would result in a huge blow to sales. Moreover, as the testing is out of the their control, the brands can distance themselves from taking responsibility for any harm. Typically, large brands advertise cruelty free practices in all areas within their control, and make it clear they have no say in the regulations of the Chinese government. Nevertheless, while the corporations cannot prevent the actual testing, many brands are in conversation with the Chinese government to create alternatives to animal testing. When shopping for cosmetics, consumers tend to consider price, personal experience, and aesthetics over ethical impacts. Furthermore, while “cruelty free” may sway a buyer, he or she is unlikely to further investigate the moral stipulations of that label. As a result, brands and social organizations will likely bear the task of minimizing cruel practices globally. However, there are still many websites that will better detail “cruelty free” labels, allowing the customer to find brands that meet his or her personal ethical beliefs.
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How can one walk the line?
From savvy shopper to community advocate by Andrew Scott 24
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With online and big-box shopping on the rise, there has been massive push back by those crusading on behalf of the small business owner.
yclists love hanging out in bike shops. From bugging the mechanics incessantly about minor issues to inquiring about group rides, bike shops represent an integral part of any local cycling community. So the emergence of direct-to-consumer, online-only bike retailer Canyon Bikes into the U.S. market is raising questions among cyclists about the value of the bike-buying experience. Canyon’s growth has been remarkable—close to 30 percent year-overyear for the past four to five years. This is due in part to Canyon’s strategy of selling high quality bikes for thousands of dollars less than the competition by cutting out “the middleman” of bike retailers. But if hanging out at the local bike shop is such an important part of the cycling lifestyle, is there something wrong with purchasing bikes online rather than in person? A major consumer complaint about the big-box retailers is that once you have purchased their products, they no longer care about the post-purchase experience. Many have lamented the poor “service” department in many massive retailers’ bike areas, which cannot do much more than recommend a shop that can fix a bike. This is where the local bike shop comes in; they are eager to repair any bike that rolls into their shop. Why would bike shops take the time to repair a budget, big-box bike one quarter of the cost of their own? Because the corner bike-shop, like most shops on any Main Street in the U.S., has transformed its business model to center on personal service rather than on cost leadership. What is happening to the bike industry is representative of a larger trend in consumer purchasing habits. The smaller businesses cannot attract customers with competitive prices. Why travel to a local shop to pick out odds and ends when Amazon Prime delivers to your door, and usually with a discount? The explosion in online sales has made the shopping experience more convenient for most consumers, but serves as a source of anxiety for those small business owners being pushed out by online retailers. Even before the rise in e-commerce, the siege on Main Street was ushered in by the advance of the big-box retailers. In smaller communities, the opening of a Wal-Mart usually meant the death of a myriad of local
‘mom-and-pop’ shops. Why go to the local hardware shop when the same hammers being sold by Lowes are cheaper? And shopping at a massive retailer is every consumer’s right: there is nothing inherently wrong with it. Moreover, some items are so basic that there is no need to spend more money than necessary. That’s the beauty of the free market. But Main Street isn’t going down quietly; there has been a large push by small business owners to fight the shift toward big-box stores and e-commerce. From organizations like Local First to events like Small Business Saturday, there has been an increasing effort to get consumers to buy locally. These efforts hinge on the fact that small businesses still beat larger retailers in offering consumers what the internet simply cannot: service and
The opening of a Wal-Mart usually meant the death of a myriad of local ‘mom-andpop’ shops. professional expertise. While some of these initiatives tug at the heartstrings of the consumer (in effect making the consumer feeling guilt for giving their money to a corporate stranger rather than a neighbor), the economics behind shopping locally do check out. Main Street shops emphasize the value added by their customer-centered experience to the same goods big-box retailers are touting. In essence, “ethical” consumers should recognize this added value, even if it is manifested in a slightly higher price tag. Take the local florist for example. Imagine someone having a significant other who has a rapidly approaching birthday and likes “those big, bushy flowers.” Say this first person is looking to spend the least amount possible, so he rushes a quick internet order, only to see the disappointment on the significant other’s face. Now, imagine that expression
coupled with a stern “this is a bouquet of snowball-bushes, not hydrangeas. I thought you cared!” Instead of saving $18 on a bouquet, he will have to spend a lot more on a gift or a fancy dinner to make up for it, which is not a great investment at the end of the day. Had he gone to the local florist and said, “hey, I need a bouquet and she likes that big, bushy flower,” those extra $18 at the florist afford him the ability to see the flowers themselves, get expert advice, and support the local community. This example is not merely theoretical, as many retailers are adopting this experience-centered business model. Grocery stores like Publix offer cooking classes to those who shop with them frequently. Bike shops will give free bike-fittings and access to shop-sponsored riding clubs to those who buy bikes directly from them. In this way, local shops transform from places where one simply acquires physical goods into providers of market knowledge and experience. Small businesses are often their owner’s entire livelihood, and as a result, such owners invest personal value into the goods they sell and service. The owner’s reputation and personal pride depend on the quality of goods and services they provide. This professional reputation becomes a significant incentive to avoid shoddy products and poor service. A mechanic will not actively sabotage a product not sold by him, but he will likely act with more panache when working on a product that he personally sold. The smart, ethical consumer will then decide whether to purchase big-box or local based on the nature of the product they are consuming. If service were a crucial part of the “product experience,” he or she would favor buying locally. From leading community activities to providing helpful customer service, local professionals’ value should not be overwhelmed by the low prices of larger retailers. The best way to truly shop ethically is to spread purchases between the community and elsewhere, never spending more than is reasonable, but keeping in mind that some purchases entail ongoing relationships, and one should foster those as best as possible.
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Chairman, CEO & Designer
Tory Burch is a pioneering fashion designer, businesswoman, and philanthropist. Serving as Chairman, CEO, and Designer of Tory Burch LLC, Burch was listed as the 73rd most powerful woman in the world by Forbes in 2015. In 2009, she launched the Tory Burch foundation to empower female entrepreneurs through small business loans, mentoring, and education. In addition to her various philanthropic contributions to arts and entrepreneurship, Burch was also named an inaugural member of the Presidential Ambassadors for Global Entrepreneurship by the Obama Administration. Burch graduated from University of Pennsylvania with a degree in Art History.
Ayesha Ahmed: In the past you’ve underlined how important your parents were in inspiring you in your fashion ventures. As your career has progressed, have any other major sources of inspiration emerged? Tory Burch: My parents had impeccable style—my design team and I are always referring back to pictures of them traveling the world in the ‘60s and ‘70s. But we have many other inspirations as well—from art, music, film and nature to people, especially those who don’t know how inspiring they are…. AA: How do you plan to differentiate Tory Sport from the many other well-established active wear brands that already exist? What do you see as potential challenges? TB: I’ve loved sports my whole life, but noticed it was impossible to find things I really wanted to wear, pieces that were toned down and laid back with the effortless style of vintage activewear. Tory Sport has a 70’s classic vibe, easy silhouettes, sharp detailing and a different take on color. The collection balances fashion and function, which is another differentiator. We work with some of the most innovative mills around the world to create high-performance fabrics that have unique technical properties and support movement. Everything from the surface treatments to the blend of high-tech yarns and natural fibers to texture and drape is inspired by the grace and strength of athletes. It’s like a whole new startup with the attendant challenges but I see challenges as opportunities. AA: The Reva flat is one of your signature items. Why do you think it was and remains so successful? TB: The Reva ballerina’s success took us by surprise when we introduced it in 2006. There is always an x factor with a product that resonates broadly... I love that the Reva combines two of my favorite concepts: the effortless style of a ballet flat and the graphic feel of our logo. We’re constantly evolving the ballerina flat to keep it fresh and relevant
with new fabrications, colors and different takes on our logo. AA: You’ve talked about social responsibility being woven into the fabric of your company and women’s empowerment is an issue that is extremely important to you. Could you elaborate a little more on how this concern with social responsibility manifests itself in your business? TB: One of the reasons I wanted to start a company was to start a foundation. Social responsibility was part of the business plan from the beginning. Giving back was essential to the kind of culture I wanted to build and sustain. Something I didn’t think about in the beginning was the positive impact it would have on the bottom line. In 2009, we launched our foundation to empower women entrepreneurs, and we found out
Our goal is to move the needle on empowering women entrepreneurs. how important it was to our employees, to attract people to want to work with us, and to our customer. AA: Could you tell us more about your foundation’s Fellows Competition and why this project is important to you? TB: Our goal is to move the needle on empowering women entrepreneurs. We believe our Fellows Program can make a difference by identifying and supporting women-owned businesses with growth potential and providing them with critical business and education resources.
increase the number and impact of women-owned businesses by expanding our capital and education programs and eventually introducing our foundation internationally. All this is in the service of a larger purpose: helping women achieve parity with men. Equal opportunity and equal pay is not a favor. It should be a given, and we are all part of realizing that goal. And by “we,” I mean men, too–it’s important to bring them into the conversation. AA: In the past you have said “Be entrepreneurial in everything you do.” How can young adults practically implement this advice in their day to day lives? TB: I didn’t realize I was an entrepreneur until I had the concept for our company and started to develop it, but in retrospect I see that I was entrepreneurial in everything I did in my life leading up to that point from co-founding a sorority when I was in college to my jobs in PR & Marketing when I was first starting out in the fashion industry. It’s about being innovative, tenacious, forward-thinking and resourceful in your approach. AA: You have been the recipient of a number of accolades and were notably named one of the World’s 100 Most Powerful Women by Forbes. What kind of responsibility comes alongside such recognition and in what ways do you see yourself as a role model for other women in business? TB: I am honored to be included on a list alongside so many women I respect and admire. I hope my experience encourages other women to embrace ambition and pursue their entrepreneurial dreams. I also hope our foundation will inspire other small-business owners to think about social responsibility from the beginning. We all have a role to play in making the world a better place.
AA: What are your goals for the Tory Burch foundation? How would you like to see it grow in the future? Are there any dream projects you have in mind?
AA: What is one piece of advice you would give an undergraduate or recent graduate who has an interest in pursuing a career in fashion or is about to embark on a career?
TB: There are many—I would love to
TB: Stay curious and never stop learning.
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Career Choice with the Greater Good in Mind: A N
U N D E R G R A D U A T E â€™ S
by Morgan Brewton-Johnson 28
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G U I D E
few years ago, a survey by U.S. charity Net Impact found that 72 percent of college students consider having a career with a positive impact on issues that matter to them “very important” or “essential.” This desire for an ethical career ranked the third most important life goal of surveyed students, below being financially secure and having a partner, and above having children and being wealthy. Around fall, many colleges start to resemble a corporate convention as students put on suits and blazers and attend a blur of informational sessions for firms—mostly banking and consulting—aiming to attract eager undergraduates. Recruiting season, punctuated by resume workshops, off-campus interviews, and hopefully congratulatory phone calls, is a source of anxiety for many college students who feel that they are again faced with an urgent decision that will determine the course of their lives for the foreseeable future. This choice is particularly difficult for the 72 percent of students who know that they want to make a difference in the world but may be unsure how best to go about doing so. Varying factors such as personal interests, prior skills, and available career opportunities lead to confusion for such students who are deciding where they can do the most good. But what does this mean for college students seeking to plan their careers? William MacAskill and Benjamin Todd founded the non-profit 80,000 hours, which helps people plan to do maximum benefit within the estimated 80,000 hours that each individual will spend working over the course of their career. The nonprofit provides transparent research and personalized advice to help college graduates pursue effectively altruistic careers. 80,000 hours outlines a few broad categories of careers in which students can pursue their interests while impacting the world positively. They recommend that across these categories, students should take whatever job they find most personally fulfilling and commit to donating 10 percent of their income to the world’s poorest people. The four career categories are: direct work, advocacy, research, and earning to give. Direct work ranges from becoming a
doctor or a social worker to founding a nonprofit, and is best suited for people who are fiercely passionate about a certain cause and excited to work tirelessly toward that goal. This type of work is the most conventional in terms of a career with a positive social impact and is highly gratifying in terms of tackling issues hands-on to see the impact of your contribution. Research entails working towards formulating a new solution to a pressing problem. It is well suited to people who enjoy and are capable of developing highly technical understandings of a specific problem, including those who might want to pursue a PhD or higher academia. Researchers can have huge social impact—for example, doctors save an average of 1.5 lives over the course of their careers, whereas the group of scientists who developed Oral Rehydration Therapy as a treatment for diarrhea save an estimated 500,000 lives per year.
No particular career path, like business or finance, is incompatible with effective altruism. Advocacy includes social or political influence in order to raise awareness and effect systemic change for a cause. Advocates have a multiplier effect because they accomplish more by encouraging many people to engage with a cause than if they had specialized in direct work themselves. People who enjoy marketing, public speaking, or politics may lead successful careers in advocacy or choose to engage in advocacy in their spare time. Earning to give entails working in a field outside of the social sector with high earning potential, and then donating a portion of that income to philanthropic causes. For example, a software engineer’s average salary of $250,000 is about five times that of
the average non-profit CEO, so a software engineer could choose to give away 50 percent of his income, have enough on which to live comfortably, and fund the salaries of two or more direct impact workers. Earning to give is best suited for people well positioned to be successful in a high salaried industry, who are passionate about specific industries, or have skills which are difficult to apply in the social sector. But even once a student has decided on one of these four categories, how to choose a first job that will lead to an entire career is still a daunting task. 80,000 hours distills the many components of the ideal job down to six key criteria: work that you are good at (or good at learning), work that helps others, work that is dynamic, a supportive work environment, a salary that covers basic needs, and a position that balances well with personal life. Admittedly, this dream job may be hard to land right out of college, so the organizations also offer advice for choosing first jobs that will better tee students up to get a higher impact job further down the road. Most students, especially liberal arts graduates, do not graduate with many workplace skills. So students should think of their first few jobs as a continued educational investment to acquire skills in preparation for their coveted high-impact roles. 80,000 hours terms these valuable skills “career capital.” They recommend that every student aim to develop as much career capital as possible early on, noting that most people do not reach peak productivity until around age forty. To develop this capital, students should look into working in organizations with steep learning curves and a reputation for strong, quality performance. Students can also pursue further degrees— particularly in fields with real world applications—enabling them to tackle groundbreaking research or to develop the skills necessary to qualify for prestigious opportunities. Further education does not necessarily need to be formal, however, as students can gain transferrable skills like coding or financial modeling in a wide variety of positions. Any opportunities that allow students to increase the value that they will bring to their work later on serve as investments into
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72% of college students consider having with a positive impact on issues that matter to them was “very important” or “essential.”
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their future capacity to give back. No choice made at age 22 should restrict future options; instead, early development of career capital should help students develop flexible skills that can be applied across industries according to their changing interests. This period of initial development allows students to reevaluate their ultimate career goals. Bill Gates is a perfect example of a career transition; he spent years of his life working on Microsoft and investing his money to maximize returns before founding the Bill & Melinda Gates Foundation with his wife in 2000. Because of his earlier investment of time and effort into Microsoft, he has been able to donate over $28 billion through the foundation and has pledged to donate 95% of his wealth to charity over the course of his lifetime. Given his strong capability to start and run a successful software company, Gates has been able to improve millions of lives with the money he earned from his private business venture. Career paths should be personal, and with enough thought, anyone can tailor their skills and interests into work that will allow them to make a positive impact on the world. Peter Singer, Professor of Bioethics at Princeton University, incorporates career choice into his work surrounding effective altruism, through which he encourages everyone to engage in altruistic lifestyles. In addition to his academic work, Singer founded and runs a nonprofit called The Life You Can Save which researches and promotes the world’s most effective charities working toward eliminating global poverty. The Life You Can Save encourages people to pledge to give at least 1 percent of their income to proven-effective philanthropic organizations to alleviate preventable suffering worldwide. Singer encourages his students to pursue the career path in which they can have the most positive impact on the world. One of his students, Matt Wage, took his advice and went to work in finance after graduating with
the pledge that he would donate 50 percent of his income to charities. In his first year after graduating, he donated over $100,000. Of course, not everyone has such an opportunity, but in an interview with Business Today, Singer outlined some guidelines for students looking to incorporate effective altruism into their career choice. First, he advises, do what you can do well. In order to succeed at any type of work, you must enjoy the work itself and find it stimulating. For Matt Wage, that meant producing algorithms that could project market commodity prices. For someone with an independent lifestyle and a sense of adventure, that might be foreign aid work. In any capacity, working life will present challenges, for which Singer advises students must have “a character that will stick to the commitment.” Singer has guided his own life’s work by being conscious of where he can contribute the most value to a given opportunity, often playing a crucial role in getting projects off the ground and moving on to contribute elsewhere when they can be effectively managed by others. One of his many projects includes partnership with One for the World, an organization started at Wharton Business School that encourages business students to pledge to give at least 1% of their income to charity for the rest of their lives. The creators calculated that Wharton’s annual enrollment of 840 students could raise over $1,000,000 per year by donating 1% of their annual salaries. They partnered with Singer’s The Life You Can Live to direct donations to the most effective charities. Overall, Singer’s advice to students looking to have an ethical career is to know that no particular career path, like business or finance, is incompatible with effective altruism. He encourages students to do all that they “can and are willing,” with the knowledge that aiming to lead an altruistic life is an act of advocacy in and of itself. Such a lifestyle has a multiplier effect through social networks, encouraging a collective responsibility for the greater good.
Ethics in Business: The Insiderâ€™s Perspective by Luca Rade
top executive at a Fortune 500 firm, a venture capitalist, an entrepreneur, and a C-suite banker turned sustainable business advocate share their perspectives on ethics in business and advice for pursuing an ethical career. Itâ€™s easy to talk about the importance of ethics when one isnâ€™t running a business. But when you have investors, customers, and employees relying on you to deliver, the stakes are high and it can seem as if ethics is a secondary consideration. Nothing could be further from the truth. In this series, four successful businessmen share their own experiences and explain why the ethical conduct of business is not only a moral imperative, but is critical to personal success and the success of their business. With the weight of achieved success behind them, they advise that the true path to success is not linear but involves risk-taking, uncompromising ethical conduct, intellectual engagement, and collaboration.
FALL 2016 BUSINESS TODAY
Charles Lowrey COO OF PRUDENTIALâ€™S INTERNATIONAL BUSINESSES
Charles Lowrey graduated from Princeton with a degree in architecture, followed by a masters in architecture at Yale. After four years of running his own architecture firm in New York with partners, he earned an MBA at Harvard, after which he worked at J.P. Morgan in real estate investment banking for 13 years, rising the ranks to run the department in the Americas. Prudential, a Fortune 500 company focused on life insurance, retirement, and investment management, was a client, and Lowrey became CEO of the real estate investment management unit, earning a promotion to CEO of the asset management division after seven years. After running all of Prudentialâ€™s domestic operations for three years, he has been running all international insurance operations for the last two and a half years.
Ethics in Business Luca Rade: Prudential is known for its ethical conduct, for example earning a ranking in the World’s Most Ethical Companies list by the Ethisphere Institute for the last two years. How does Prudential embrace ethical business and how has this manifested itself in the company and its activities? Charles Lowrey: What we do, very simply, is make promises and fulfill promises. And we have been doing that for over 140 years. Many of our promises are really long term. We’ve had clients that have been with us for 80 years. So you better have faith in the company that has made you this promise. And our view is that ethical companies are more likely to be around for a long period of time. If you do business the right way, then by definition you will be able to fulfill the promises that you’ve made – and fulfilling those promises is critical. So everything we do is built around the belief that we are here to serve the customer in the best possible way, and in the most ethical way, and that is the way we conduct our business. LR: Do you have any examples of the decisions Prudential has made, where you had to consider the ethical implications of the decision? CL: I am going to answer that in a slightly different way. I think we make multiple decisions every day about what to do and what not to do. The people we choose to do business with and the people we don’t. I would say that in our recruiting the top attribute we look for is a strong moral compass, so every day as we hire people we are
evaluating them based on their moral compass. Ethical behavior is embodied in every decision we make in some shape or form, and although some people may not even realize it, it is absolutely there. LR: And what do you think are the major obstacles to the more widespread option of more ethical business practices of companies, particularly in the United States? CL: I think if there are any obstacles – and it is the same for both companies and countries – it is more an issue of culture. In some countries, for instance, briberies are accepted, and it is just the way business is done. It takes firms and people to say no, we won’t do that, and either you accept the terms under which we will do business or else we won’t do business with you. And I think that’s the same in companies. If you look at companies that have had ethical issues, it is usually caused by a culture of cutting corners or doing things differently. Being an ethical company is not easy. It is constant vigilance, it is constant affirmation of the culture you want to see, and it is policing that culture very carefully to make sure that there are no cracks in the plaster or that there are no little things that begin to slip. That’s incredibly important, the reaffirmation of the culture you want to create within the company. If you do that, then it is a kind of virtuous circle. You bring in people who want to do the right thing and they reinforce it and it keeps going, but you have to nurture it, you have to make sure it stays in place.
Ethical Career LR: Moving more to you personally, when did you first start thinking about the ethics of business and why? CL: I’ll turn it around, and say that I don’t remember ever not thinking about the ethics of business. In other words, again, every decision you make, be it big or small, reflects an attitude about ethics. It has just always been a part of who I am and part of the way in which, hopefully, one lives one’s life as well as one’s business life. I don’t see a separation between the two. LR: For undergraduates who are either early in their studies or are about to enter the work force, what advice would you give about how to promote ethical business, both in terms of career choice, and once they’re at a company, how would they do so within those companies? CL: So let me go to career choice first. I think you choose the company and the people, not the industry and the career. So you can have very ethical companies in a bad industry, and you can have bad companies in a really good industry. I think your first choice is based on an evaluation of people whom you work with, and the culture of the company to which you go to work. The second part is what can you do to affect culture, and I think by your actions every day, whether you are a first day on the job analyst,
or whether you’re the CEO of a company, your actions matter and people watch. People will watch above you, below you, your peers, and so every day, what you say and how you act is going to affect the culture of the company. The culture is merely a reflection of all of the employees, and from day one you are one of those employees. Put simply, young people or new employees can make a very material difference on the culture of the company from the day they arrive. LR: So it is a model by which you change by example? CL: Yes. You lead by example, and you can change by example, as well. LR: Do you have any additional advice for an undergraduate that is earlier on their studies? CL: Reputations take a long time to build, and there is no time like the present to start to build a reputation, and a big part of reputation is how one conducts oneself ethically. So I don’t think it’s ever too early to start thinking about ethics and the decisions you make, whether you are in high school, college, graduate school, work. Again, I don’t think I see a distinction between conduct at work and conduct outside of work, and, therefore, what one does outside of work or in college can make a big difference.
FALL 2016 BUSINESS TODAY
Peter Bruce-Clark CO-FOUNDER AND PARTNER AT PERMUTATION VENTURES
Peter Bruce-Clark was brought up in Melbourne and Oxford. After a completing degree in critical theory and literature in London, Peter took up an internship at a management consultancy in New York. This was followed by a management and finance degree at Cambridge University, which inspired Bruce-Clark to work in investment to promote a healthier financial system and encourage investment in transformative projects. After his post-graduate degree, he worked for the investment research company Sovereign Wealth Center, before co-founding Kalytix Partners in San Francisco to provide strategy, management and operational support to a range of public and private investors. He simultaneously conducted research at Stanford University regarding innovation in investment management, sponsored by a multi-family office.His path changed when he met Riva-Melissa Tez; upon meeting, â€œa spark ignited into flame.â€? Together they co-founded Permutation Ventures, an AI-focused venture capital firm.
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Ethics in Business Luca Rade: How does Permutation Ventures, and do you personally, balance ROI with the responsibility to conduct business ethically and have a positive impact? Peter Bruce-Clark: The purpose of Permutation Ventures is to fund emerging machine learning applications in high-impact sectors and industries. We’re a traditional venture capital firm inasmuch as the legal structure is the same, but our specific focus, investment mandate and operational activities mean that any investment we do is impactful by necessity. That’s the point of artificial intelligence (AI) -- it is a kind of ‘meta-industry’ that will transform all sectors. I’m a firm believer that many AI applications will significantly improve our lives, drive astounding efficiencies across industries, and, importantly, augment our human decision-making capabilities so that we can tackle some of the largest challenges facing the world today. Even Steve Jurvetson at DFJ Venture has noted inroads in machine intelligence could help us tackle global issues like climate
change. I tend to think – and see – the same. As a firm, balancing ROI and being responsible are things we think about all the time, and to us, they’re not incompatible. A large European asset manager once said at a conference, “If you’re not thinking about sustainability, responsibility, impact, you’re not a good investor.” That resonates with me. At Permutation we have an explicit investment philosophy that requires us to find ‘high-impact’ areas of AI application, and because we’re sector-agnostic we’re constantly learning about what impact looks like for different industries. In some ways we’re lucky, because the rise in sophistication of AI algorithms, software, and advancements of underlying hardware, means that finding breakthrough and impact-oriented companies is easy. I’m constantly amazed and inspired by novel applications of AI, and I’m convinced that any short-term externalities caused by new applications will be replaced with long-term societal benefits.
Ethical Career LR: What were the major factors you took into account when choosing your career path coming out of college? PB-C:I didn’t so much choose my path as made my own, trying to stay true to my value and belief systems as much as I could. When I graduated from Cambridge it seemed like I had both loads of work options as well as very few. In retrospect everyone around me, including myself, was asking the wrong kinds of questions. Should I work in consulting? Should I go into investment banking? Should I go to work for a big corporation? I felt peer pressure to pursue one of these industries, but outside of job status and money I found it pretty hard to get excited about any of them. I don’t think “making money”, “reducing overhead” or “driving revenue” are the best ways of inspiring people into the workforce. Personally I think the right kind of question to ask when contemplating what to do with your life is not “What should I do for work?”, but “What do I want to see in the world?” That, to me, is a much better guiding question. You might be surprised where you end up. LR: What would be your one piece of advice to current undergraduates contemplating their careers? PB-C: Never believe someone who tells you there’s only one route
to success, or that you have to do the exact things they did to get to a similar position to theirs. Your version of success might be completely different, so following the same path or doing the same things is unlikely to yield the result you want. Not only could you end up doing the wrong thing, but you might hate that wrong thing. Work-related depression is a killer. When I graduated from Cambridge I went and met with a lot of different people in a variety of different industries. Most of the time these people would just recount their own career paths and were dogmatic as to what I should be doing. I once met with a guy who runs a successful private equity firm, and for an hour he talked at me about what my career path should be, including the timing of each job and a smattering of academic and industry credentials I needed to get to become him. It was so awful. But it was also useful because at least I understood the kind of person I didn’t want to work with. It’s far better to take advice from successful people who listen to you and are receptive to who you are. Those people tend to listen to what you’re driven by, what your value system is, and what you believe about the world. You’ll know those people when you meet them because they’ll encourage you to learn more and introduce you to people on the same wavelength. Don’t be afraid of exploring or doing the unconventional.
FALL 2016 BUSINESS TODAY
Poshak Agrawal CO-FOUNDER OF ATHENA EDUCATION
Poshak Agrawal grew up in Lucknow and New Delhi, India. In 2008, he attended Princeton University, where he learned the power of plurality and of learning the best from all cultures and traditions, and voraciously consumed Greek philosophy. He always had the spark of an entrepreneur in him, and after graduation he co-founded Athena Education, a company which provides after-school education in liberal arts in India.
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Ethics in Business Luca Rade: How do you balance profit with the responsibility to conduct business ethically and have a positive impact? Poshak Agrawal: There is no balance. Righteousness and ethics come first and cannot be compromised. If we, citizens of Princeton, cannot set an example for broader society, who will?
A different way I look at this is: to stay in society and engage in commerce for the long run, ethics cannot be compromised. We are not in the business of making money. We are in a business that makes money.
Ethical Career LR: As a Princeton graduate, you were exposed to the world of finance and consulting. Do you think it’s possible to have an ethical career in these professions? PA: One of my mentors often reminds me, money makes the world go round, and there is nothing wrong about it. Fire burns, and cooks. Finance enables commerce. It provides availability of capital to make the world go round. Consulting gives advice on how to go round fastest. As long as we are focused on providing that value in a socially conscious way, it is very much possible to have not only ethical, but also deeply meaningful careers in finance and consulting. Who do you think funds universities? LR: If you could give one piece of advice to current undergraduates,
what would it be? PA: Don’t be pre-professional. Princeton and other liberal arts colleges have been around for lot longer than you and I. Have the humility to accept that they know what they are doing. There is a reason why we have perfected the liberal arts curriculum. Immerse yourself in this curriculum. Try courses you would never otherwise. In the long run, it will develop your mind. Don’t have too much anxiety about “on the job” skills; if you are fundamentally smart and driven, you will figure out your profession. But a strong mind and skills that you will develop at college will not only help with this, but also stay with you for life. In short, take a philosophy class.
FALL 2016 BUSINESS TODAY
Herman Mulder CHAIRMAN OF TRUE PRICE FOUNDATION AND FORMER SENIOR EXECUTIVE VICE PRESIDENT OF ABN AMRO BANK
Herman Mulder served as senior executive vice president of ABN AMRO, a major Dutch bank, from 1998 to 2006. In 1998, an NGO alerted ABN AMRO of serious ethical lapses at a project the bank was intending to invest in, which was a wake-up call for Mulder as to the importance of ethics in conducting business. At ABN AMRO, he coordinated the ABN AMRO initiative on Sustainable Development, and he spearheaded the Equator Principles, a risk management framework that has been adopted by 79 financial institutions globally, including many of the worldâ€™s biggest banks. He is now chairman of the True Price Foundation and chairman of the Global Reporting Initiative.
Ethics in Business LR: Could you explain the rationale behind True Price? Herman Mulder: Reflecting true prices is about an ethical responsibility. In many cases, prices are so low that it cannot be that living wages are being paid, and they are not. I think we have a duty to ourselves and a moral duty to everyone to consider that sooner or later, we have to pay the true price for these products. My own slogan here is: “nothing is impossible, particularly when it’s inevitable.” Your generation, and I hope I will be there as well, will be paying the true price transparently and fairly for the products which it will buy in the supermarkets and drug stores. LR: What do you think is the main obstacle to widespread adoption of more ethical business practices?
HM: I think collaboration on ethical business is possible. At ABN AMRO, for example, I helped create the Equator Principles - a baseline agreement among several major banks including JPMorgan, HSBC, and Citi to not compete on values. Competition on all other fronts was ok, but on values, a framework was set down by which we all agreed to adopt a standard approach to considering the environmental and social risks of different projects. So widespread adoption is possible. I think the main obstacle to such cooperation is that it requires courage and communication; but it is necessary. The government can do a lot, but so can business, and for a truly sustainable world, business also needs to be involved.
Ethical Career LR: What would be your advice for current college students who already want to take into account sustainability as they are entering the business world? HM: First of all, the word “sustainability” is often portrayed as working on something that is nice to have but not a must. I would say, it’s all related to doing better business rather than simply sustainable business. It is better business.There is a fairer distribution throughout the value chain of products, more value to your investors, and you are accounting for all the externalities. So, it is in your self-interest to engage in sustainable, responsible, and ethical business. Because there is no way to hide in this connected world. Injustice is often there before the impact has occurred. Even the suggestion of malpractice is already a reason for consumers, or NGOs, or the media to say: “you as a company, you’re not taking care of the things which you should stand for.” And I’m very happy to see, also in the U.S., an increasing number of companies, even if they don’t call it sustainability, saying that this whole issue of better business is something that goes to the core of why we’re doing what we’re doing. I would say that my second recommendation to you as a professional or a student is to ask your employer or your professors how they are going to realize the Sustainable Development Goals. I think that is a
very important aspirational platform now to use as an inspiration for everyone. To simply realize that we’ve got to focus on it; we’ve got to report on it. I think the Sustainable Development Goals should be on your agenda, and on my agenda, so that we create the world which you deserve and which I would like to see. A world of more fairness, transparency, and justice. LR: Finally, what would be your parting piece of advice for current students who are interested in ethical business? HM: Embrace the Sustainable Development Goals. They are a global, comprehensive agenda for next 30 years that we should embrace at all levels. You can implement them in your personal lives, at the university level, and in the businesses you work for. Another piece of advice would be to work together in unusual partnerships, both personally and between organizations. And take initiative; go to companies and actually ask them about these sorts of things. If you work at a company, follow a product from supermarket to source, and see what is right and what is wrong and what could be done better. Students and employees can take initiative and actually look at the products they’re producing and where they come from. This is an important component of an ethical, forward-looking mindset.
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ETHICAL DIVESTMENT by William Liu
How Princeton Students Use Investment to fight the For-Profit Prison System
s millennials bring their renewed attention to the ethics of businesses, college students are contributing to the movement through divestment campaigns, encouraging their university endowments to cease supporting unethical businesses that do not share the values of the scholarly institutions they represent. This phenomenon is not a new one, with modern divestment beginning in 1977 when Hampshire College became the first college to divest from South African businesses in protest of apartheid. Since then, college students have brought attention to a range of social and ethical issues, including tobacco, fossil fuels, and the Israeli-Palestinian conflict. Although many of these movements are largely symbolic in nature, with no obligation for administrators to address such issues, increased awareness has resulted in significant divestment results. As of 2015, the National Association of College and University Business Officers reports that university endowment assets total approximately $529 billion, indicating substantial spending power. In recent years, colleges and universities have been responsible for 12 percent of $3.4 trillion divested from fossil fuel companies according to Fossil Free, and the University of California system has led efforts to divest from companies that support Israeli military efforts, passing resolutions that support divestment as a peaceful answer to the Israeli occupation of the West Bank. One of the most recent social issues to capture the attention of the student move-
ment is the injustice perpetrated by the private prison industry. Columbia University made history in Spring 2015, becoming the first college in the United States to divest from private prison companies by agreeing to sell its estimated 220,000 shares in G4S, the world’s largest private security firm, and its shares in the Corrections Corporation of America, the largest private prison company in the U.S. Inspired by the success of Columbia University’s success in the field, Princeton University’s Students for Prison Education and Reform (SPEAR) called a referendum vote during the Princeton Undergraduate Student Government’s Spring 2016 election in an attempt to become the 2nd Ivy League University to divest from private prisons. The group cited failures in the private prison system to adhere to government standards, resulting in “difficulties in healthcare, violence against LGBTQ people, food availability, access to legal services, and sexual abuse.” The text of the referendum is as follows: “Should the Council of the Princeton University Community and the Princeton University Investment Company dissociate and divest from corporations that draw profit from incarceration, drug control and immigrant deportation policies, including: Corporations that operate private prisons, jails, halfway houses and/or immigration detention facilities in the United States, such as the Corrections Corporation of America, The GEO Group and G4S and Corporations that contract exclusively
We can decide that it is against our university’s values to invest in a corrupt system of incentivized incarceration.
FALL 2016 BUSINESS TODAY
with such correctional facilities, including Global Tel Link, JPay, Securus and Corizon?” According to SPEAR President, Julie Chen, “Princeton as a community shouldn’t be profiting monetarily off of the incentivized incarceration of human beings. When prisons are privatized, we have companies lobbying the government for higher mandatory minimums and bed quotas to keep more people in prison. While we can’t change the system right now, we can decide that it is against our university’s values to invest in a corrupt system of incentivized incarceration.” Unlike a previous divestment referendum regarding companies involved with the Israeli occupation of the West Bank in 2015, which failed by a narrow margin, this particular referendum failed not as a result of overwhelming opposition, but rather due to a referendum procedure that required at least one-third of the undergraduate student body to participate. “I wouldn’t portray our turnout negatively, since the number of voters for this referendum was higher than the number of total votes for class council officers, which are the direct representatives for the student body,” said Chen. “The fact we had so many people vote for this issue, which most individuals don’t feel a personal connection to, is an accomplishment in itself, even if it didn’t reach the one-third turnout threshold.” Of course, even had the referendum passed, there is no guarantee that divestment would occur. When the student body at Cornell University passed a similar environmental divestment referendum earlier this year, the Cornell Board of Trustees voted to table the act indefinitely while laying out new guidelines. The Board would “only consider divesting from companies and industries when the company’s actions or inactions are morally reprehensible, which include geno-
cide, human trafficking, slavery or systemic cruelty to children, including violation of child labor laws.” The SPEAR referendum itself would only guarantee the submission of a formal letter submitted on behalf of the Undergraduate Student Government to the Board of Trustees of Princeton University. From there, discussions on whether there is substantial justification for divestment and the degree of continued student involvement would begin. According to Andrew Golden, President of the Princeton University Investment Company (PRINCO), “The protocols for divestment, which were set during the 1980s, laid out three conditions for when an issue deserves this action: there has to be a core university value at stake, there has to be substantial and sustained interest in this issue, and there has to be an overwhelming consensus on a position within the university community, including students, faculty, alumni, and staff before any divestment action can occur. Divestment is only considered and used in conjunction with a complete disassociation from a company, as it would not make sense for us to divest while continuing to buy its products or accepting its grants. The resources of the University are directed at the creation of a social good that Princeton is uniquely positioned to provide through our research and teaching mission, not to advance a specific political agenda. Universities in general are the best places for unbridled debate to take place, so it should take a very special occurrence for the University to ever declare an official position on something. Individuals can hold views, but the University as a whole needs to be very circumspect before declaring one view right or wrong.” As a result, despite numerous divestment campaigns on issues ranging from environmental concerns to the Israeli-Palestinian conflict, “Divestment has only
been used twice over the course of several decades: apartheid and the genocide in Darfur. We cannot simply choose to divest from different things regularly without degrading the impact of the action of divestment” said Golden. In discussing the logistics behind a hypothetical divestment action, Golden states that, “PRINCO does not make decisions at the individual security level. Instead, we invest in 75 relationships with money managers whom we believe have good judgment. We spend hundreds of man-hours vetting these individuals and we engage with them intensely during our relationship, striving to become the best partners we can be by engaging in real time dialogue. In the Darfur case, we were able to tell our managers a list of companies we were concerned about and engaged in a dialogue with them on why these companies were a concern to us. Although we can’t force the managers to sell their shares, we could withdraw our assets from their management over time if they don’t. If there were companies that we don’t want to be associated with but can’t get out of, we would look for overlays to reverse the impact of this association, which is a matter of practicality.” Even if the actual divestment process may not come to fruition, there are recognizable effects resulting from such campaigns. According to Micah Herskind, head of the divestment team of SPEAR, “Our divestment campaign can have both symbolic and practical effects. The practices of these companies are in direct opposition of our core university values, and our university should not profit off these practices. The main problem is that there is not a lot of awareness on this issue since it is so easy to ignore: people who are behind bars rarely gain publicity, and these issues are not ones that would appear in the headlines regularly. Yet, student divestment movements have definitely
caught the attention of the world, and the economic and symbolic pressure is working. This past summer, the federal government issued a memo promising to drastically reduce and end many contracts with private prisons, leading to a major drop in the stock value of private security firms such as CCC. We at SPEAR believe that such companies should not fundamentally exist, and the end of government reliance on private prisons is a major step towards eliminating any need for such unethical and immoral companies.” Although this particular referendum may have failed, Herskind notes “the movement is alive and well. We have bolstered our divestment committee to reorganize and solidify our efforts, both within and beyond SPEAR. There are many options we would like to explore, focusing on demonstrating student engagement with this issue and maintaining presence on campus through publicity campaigns, demonstrations, and open conversations on the issues posed by potential divestment.” Commenting on how a future referendum may play out, Chen observes “SPEAR is a fairly busy organization, and we were running many activities at the time of the first referendum, so our efforts were a bit scattered. If we were to sponsor another referendum in the future, we would do a much better job delegating responsibility to ensure all of our bases were covered, including publicity campaigns on campus, petitioning for signatures to initiate a referendum, writing Op-Eds in the Daily Princetonian, and communications with the University administration. Although we may not see another student referendum immediately, we will definitely continue to voice our concerns to administration and see that our message for divestment carries through.”
In recent years, colleges and universities have been responsible for 12% of 3.4 trillion divested from fossil fuel companies
FALL 2016 BUSINESS TODAY
ill Rogers Chairman & CEO
Bill Rogers is the current Chairman and CEO of the financial services company SunTrust Banks, Inc., where he is known for his dedication to volunteering and philanthropy. Since beginning his career at SunTrust in 1980 within the commercial banking division, he has risen to various senior positions throughout the firm, culminating in the appointment to his current role as Chairman and CEO in 2012. Prior to working at SunTrust, Rogers received a bachelorâ€™s degree in business administration at the University of North Carolina at Chapel Hill and went on to earn an MBA from Georgia State University.
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Melissa Fulenwider: Tell us about SunTrust’s mission as a financial services company. Bill Rogers: Across America, the financial recovery remains fragile. People and businesses are optimistic, but many need help to gain financial confidence to move forward. At SunTrust, we are dedicated to Lighting the Way to Financial Well-Being. That’s our purpose. It’s not just a slogan, but rather embedded in our operating practices, hiring and training, marketing investments and performance metrics.
We wanted to spark a national conversation about financial stress in America, tell people it’s not taboo to talk about money, and offer tools and steps to help them gain financial breathing room.
As a top 10 U.S. bank, we have an opportunity and an obligation to make a difference in people’s lives and the economy. We started on this path several years ago, and this year, did something pretty unconventional. We took out a Super Bowl ad, not to promote products, but rather to launch the “onUp” movement. We wanted to spark a national conversation about financial stress in America, tell people it’s not taboo to talk about money, and offer tools and steps to help them gain financial breathing room. MF: What prompted the onUp movement, and how is it going? BR: In our research with Nielson and our own National Financial Confidence survey, we found statistics showing issues in the nation’s banking system: 75 percent of Americans report experiencing financial stress. About 40 percent don’t have $2,000 for an emergency, and that jumps to 60 percent for millennials. 1 in 4 millennials aged 21 to 34, after the traditional college years, still rely on some financial support from their parents, such as rent, cell phones, insurance or other needs. And 1/3 of Americans have nothing saved for retirement. We know that small steps can help to build healthy money habits. The key is to get started. For example, have you really thought through your values and what matters most to you? Is your spending aligned to that? Do you track your spending, have alerts to avoid overdraft fees, or use direct deposit to save a little each pay period for an emergency? The onUp.com site has information and resources for almost every stage in life and every circumstance – from saving for a wedding to paying down debt or getting ready for homeownership. SunTrust also runs financial wellness programs with a number of community groups. We’re on track this year to reach about a million people taking
FALL 2016 BUSINESS TODAY
steps toward financial confidence. MF: Your purpose really emanated from within the company. How did you build that culture and commitment? BR: When we surveyed SunTrust teammates a couple of years ago, we were surprised to see the same stats that mirrored the nation. People in our own company were experiencing stress about their finances, and we are bankers! So we sought out a leading financial fitness program and offered it to SunTrust teammates, along with up to a $1,000 match for completing the modules and starting an emergency savings fund. The response was amazing. More than half of SunTrust teammates participated, and we’ve matched $7 million for emergency funds to date. We also give every SunTrust teammate an extra day off each year, just to focus on their own finances. Now, about 80 percent of our teammates say they are on the path to financial confidence, and that the program has made them better at counseling others. MF: Can you explain more about SunTrust’s commitment to clients and communities, and provide a few examples of this in practice? BR: One of my predecessors once said, “When you build your community, you build your bank.” We still believe that. First, in all of our business lines, we take a “client-first” approach, which means listening to their needs and providing counsel and solutions accordingly. Secondly, across our company, we give back with volunteer time and monetary donations. It’s core to our purpose. In fact, we offer a separate Volunteer Day off for every SunTrust teammate, with an emphasis on financial education. Last year, SunTrust logged 241,000 hours of volunteer time in support of 3,200 non-profit organizations. SunTrust has various examples of our community support: SunTrust partnered with Wake Technical Community College to create and help fund the SunTrust Foundation Center for Financial Education. We support Junior Achievement to provide financial literacy for school-aged youth, teaching financial literacy, entrepreneurship and workplace readiness. We provided a grant to Georgia State University to create the SunTrust Student Financial Management Center, a first-
of-its kind program to help students address financial issues that can be obstacles to earning their degrees. And through onUp.com, we try to inspire everyone to take a step and move from financial stress to confidence. I’d encourage everyone to check it out. MF: Could you please discuss the SunTrust Foundation’s activities? For instance, could you elaborate upon the disaster relief that SunTrust provided after Hurricane Matthew? BR: The support of our communities through the SunTrust Foundation is grounded in determining where we can make the greatest difference tied to overcoming financial stress. Our giving is focused on education, health and human services and civic and cultural activities. We currently have partnerships with four national organizations: United Way Worldwide; Autism Speaks; Catholic Charities; and Operation HOPE. In addition, we partner with many other organizations on a regional and local basis throughout our service area. Hurricane Matthew impacted many people in the geographic areas we serve in the Southeast and Mid-Atlantic regions. Our teammates decided to open branches on Columbus Day, a traditional bank holiday, so clients could take care of their financial needs. All of our branches accepted donations to the American Red Cross, and the SunTrust Foundation made a $250,000 donation. In times like that, it is heartening and humbling to see the organization put its purpose into practice.
contributing at least something toward your retirement early, and try to work up to tucking away 10 percent of your income. Finally, don’t be afraid to learn about money or talk about money! Take an active role in managing your money by learning from reputable sources. Read books, attend classes, listen to podcasts, and look to your bank as more than transactional. We are here to help. MF: What obstacles have you had to overcome in your career, and what did you learn in the process? BR: I once was offered a position that, on the surface, appeared to be a step backwards. It turned out to be a tremendous broadening experience. So I’d say, don’t shy away from lateral moves or stepping out of your comfort zone. Those can be some of the best stretch-and-grow opportunities. Also, I learned that my success was clearly dependent upon others. So whether part of a team or leading a team, it is vitally important to develop strong relationships with trust and common goals. That’s one reason we call people “teammates” at SunTrust, not “employees.” Teammates don’t let teammates down. I learned that early on. MF: What advice do you have for undergraduate students concerned with integrating ethics into their academic pursuits and future careers? What has enabled SunTrust to successfully pursue financial profit, corporate responsibility, and community engagement simultaneously?
MR: What advice would you provide to undergraduate students as they prepare to move out into the corporate world and manage their own finances?
BR: Ethics define who you are; they are your personal brand. They convey what you value, and are evident in how you approach your work and your relationships.
BR: From a career standpoint, find an organization that aligns to your values, and ensure that you have purpose in your work. That is very rewarding, on many levels. It’s what motivates me every day.
I do believe a company can be both purpose-driven and performance-driven. The two are inextricably linked. At SunTrust, we take a needs-based approach in serving our clients. That’s our operating model and part of our code of conduct. The more clients we help, the more we fulfil our purpose. We work hard to build a positive, purpose-driven culture within our company, measuring teammate engagement every year and taking steps to listen and respond. An engaged workforce is a productive and giving workforce. Engagement becomes evident in our results, as we take care of clients and serve our communities.
From a financial standpoint, my basic advice to those entering the workforce is relevant to anyone at any stage of life: have a plan and work at it, synch up your spending with your values, maintain a budget, and live within your means. Also, be sure to take advantage of programs offered by your employer, such as a 401(k) match. If you don’t have access to a 401(k), open up a Roth IRA. Begin
I do believe a company can be both purposedriven and performancedriven. The two are inextricably linked.
FALL 2016 BUSINESS TODAY
The Decline of Privacy in the Era of
by Gladys Tseng 50
FALL 2016 BUSINESS TODAY
Companies like Google, Facebook, and Apple have already started shifting the conversation from how closely they should be allowed to monitor users to what they should ultimately decide to do with the data.
n our era of big data, there is no precise definition of privacy. As users of free and necessary services like web browsing, email, and social media, we give out a lot of personal information. Our dependence on these services allows companies such as Google, Facebook, and Apple, to collect a great deal of information about us. Although there is an ethical responsibility to protect individual users’ privacy, certain companies have the ability to help governments in matters of national security, as they may possess more information than federal investigation agencies. The issue of prioritizing national security over the protection of individual privacy first became critical immediately after 9/11. In the aftermath of this attack, it was almost taken for granted that privacy was trivial compared to the danger of allowing terrorist organizations to remain hidden from government eyes. However, since then, the way in which consumers engage with technology has changed. For example, advances in GPS and location-tracking technology mean that users will have to subject themselves to a much greater level of surveillance in exchange for the convenience these services offer. While consumers are in part responsible for controlling the amount of personal information they provide online, recent surveys found that many Americans do not understand how privacy policies work. The results of a 2014 Pew survey showed that 52 percent of Americans falsely believe privacy policies state a company’s commitment to confidentiality. In fact, these privacy policies actually state the ways in which a company can manage user information, and sometimes include authorization to hand over information to other entities. Companies like Google, Facebook, and Apple have already started shifting the conversation from how closely they should be allowed to monitor users to what they should ultimately decide to do with the data. Technology has been advancing so quickly that existing privacy laws in the U.S., such as the Privacy Act of 1974, are no longer comprehensive enough to address cases of possible violations. Without clearly defined regulations, the burden falls on companies themselves to make responsible choices in
on the part of Americans regarding relatively unregulated data brokering. However, this may be because they are unaware of the extent to which they are being tracked and are therefore unable to determine how it might affect them. A Pew survey from January 2016 revealed that while Americans place high importance on data privacy they lack an understanding of how it is being protected. Companies should be more transparent in their privacy policies, which many people find unreadable. There are individuals and organizations that are knowledgeable about the intricate details surrounding data privacy and dedicate themselves to enforcing their proper implementation. One such organization is the Electronic Privacy Information Center (EPIC), a public interest research group whose efforts include filing lawsuits against entities that violate privacy laws. It was established in 1994, soon after a poll revealed that 80 percent of Americans were concerned about their privacy being threatened. EPIC has since worked with legislators and the White House to propose regulations and policies on privacy, encryption, and security. Historically, EPIC has been rather successful, winning around fifty percent of its lawsuits. However, it is limited in its ability to address the deeper issue of the psychology behind people’s perception of privacy. Certain companies are so opaque about how they manage personal information that fear drives some consumers to avoid visiting particular sites or using social media platforms. On the flip side, fear simultaneously plays the opposite role, leading to acquiescence of increased surveillance to prevent shootings and terrorist attacks. In recent years, social media sites like Twitter and Facebook have been able to provide clues that help the FBI identify and target potentially dangerous individuals. In the last year or so, fears surrounding privacy have increased given the extensive media coverage on hackers, security breaches, and situations where peoples’ personal information has been compromised. Many now believe that no information is truly safe. Despite their varied detrimental outcomes, data breaches have at least succeeded in putting pressure on companies
to place a stronger emphasis on security measures and to be more transparent with customers about risks regarding personal information. Increased transparency may be the most important measure companies can take to narrow customers’ knowledge gaps and gain their trust. Possible solutions include greater visibility of privacy settings, more varied tracking options, and alerts that inform users which aspects of personal information will be shared. Companies like Apple and Facebook do provide a range of options in their existing privacy settings, but according to the same Pew survey from January 2016, only 43 percent of Apple users knew they could turn off location-tracking on their devices or even alter default privacy settings at all. One common example of miscommunication between companies and consumers is the “do not track” option on web browsers like Google Chrome, Firefox, and Internet Explorer 9. For one, this option is usually not the default, so a large number of users are simply unaware of its existence. More importantly, it also does not necessarily mean that a user who does select it will be completely safe from tracking. In that sense, “do not track” is rather misleading, as its true function is to signal to sites that a user does not wish to be tracked. Whether a site will actually respect that signal is unclear. The rise of big data has made information sharing so ubiquitous that, as a population, it is necessary understand how it affects our privacy. As consumers, we retain control in some areas, such as the content we choose to post online. However, this control is limited since sites like Amazon record purchase histories and sell this information to advertisers. There is a need for updated regulations on how companies manage personal data, as well as greater transparency in how privacy laws are explained. While awareness of this issue has increased significantly in recent years, people ought to be educated more thoroughly on how to better control their personal information. No one should have to feel helpless when it comes to protecting their own basic privacy, particularly since we are in an era where living off the grid is not a viable option.
In the last year or so, fears surrounding privacy have increased given the extensive media coverage on hackers, security breaches, and situations where peoples’ personal information has been compromised.
AK-47 How 70 years of strategic positioning crafted the ultimate killing machine
by Anna Pouschine
ladimir Putin recently announced his decision to officially honor the 100th birthday of Mikhail Kalashnikov, creator of the world’s most iconic and notorious assault rifle, the AK-47. Such a government-sponsored celebration is usually reserved for esteemed cultural icons – such as Dostoevsky and Chekov – sparking surprise at such public reverence for the controversial figure. Kalashnikov’s story largely mirrors those of other pioneering innovators; however, global reproductions of his creations are original in their ability for exceptional destruction. Given our generation’s reverence for innovation, the gun serves as a key reminder for the potential destructive consequences of revolutionary invention. The economic contexts and branding factors that contributed to the AK-47’s rise also enabled its legacy to shift from one of the deadliest weapons in creation towards a pride-worthy, patriotic achievement. The Avtomat Kalashnikova proved revolutionary for its simplified design, essentially becoming the Model T of automatic rifles. It was created in the wake of World War II as Russia was hell-bent on developing a new assault rifle in fear of continued warfare. Kalashnikov unveiled his streamlined prototype in 1947 and received praise for its capability to be “everyman’s gun,” combining the necessary automatic and semiautomatic fires with convenience and ease of distribution. The simple gun was fast and inexpensive to manufacture, capitalizing on an elegant structure comprising only a few moving parts. The short, light structure proved to be an efficient usage of material resources, a common concern in the often-wasteful Soviet industry. Even the bullets themselves were leaner than previous variants, allowing operators to carry more cartridges at any given moment. Its ease of use greatly bene-
fitted users and fueled demand for the weapons: the simple structure made assembly and disassembly intuitive, requiring minimal training for soldiers. While the unsophisticated design may hinder accuracy, the gun is readily adaptable to all climates – from Siberian snow, to desert sand, to Vietnamese rains. Two years later, the Soviet Union eagerly put the streamlined guns into mass production. These user-friendly features enabled the Soviet regime to carry out its objective of standardizing military equipment throughout their allied states. The Soviet Union amped up production by building entire factories across union states to amass an inventory that would cover the entire Soviet military. To better promote the guns, Kalashnikov became a national hero in Soviet propaganda. This tone of national pride elevated the arms to an iconic status. They were viewed with a sense of triumph, politically positioned as a patriotic achievement that protects the motherland from foreign enemies – even schoolchildren trained with them as a part of their curriculum. As a new product, the AK-47 shot through the developing phase, given its reliable, streamlined design, rapid output, and strong branding. However, the technological breakthrough quickly called for the competition to respond, triggering a dangerous escalation. Western concerns about weak armaments ignited an international arms race. In 1954, the United States launched the M-14 assault rifle, which later evolved into the M-16. Although the Americans’ weapon proved practically inferior, due to functional issues in harsher climates, the pressure for advancement added fuel to the heightening tension between the two countries. As America, and eventually other European coun-
The “Avtomat Kalashnikova” proved revolutionary for its simplified design, essentially becoming the Model T of automatic rifles.
tries, developed their own variants, the sheer number of assault rifles produced globally swelled rapidly. A key turning point in the history of assault weapons was the Vietnam War, when the AK-47 wielding guerilla fighters successfully held their own against the American fighters. The new weaponry leveled the playing field between the two countries – a remarkable break from the ease of oppression under colonialism given the technological imbalance. The intuitive gun allowed the Vietnamese fighters to implement the new technology onto the battlefield quickly and without intensive training. The United States, in contrast, used less-reliable M16’s, which were more prone to jams and other breaks. The AK-47 thus emerged as a recognizable symbol of power, particularly in the fight against perceived Superpower oppression. While the arms provided much aid to the Vietnamese, who were better equipped to protect themselves against the American forces, the guns also very likely prolonged the war and contributed towards greater bloodshed on both sides. Ethically, it proves difficult to weigh the increased battlefield equality due to the democratization of weapons against the increase in loss of life. Yet, production of AK-47s only continued to increase. In part, the economic recession after the fall of the Soviet Union heightened demand for the weapons, given their devaluation due to exchange rate changes. The economic weakness left the USSR vulnerable and in need of ways in which to restore its economic backbone, propelling the new nation to support production of this impressive product. However, other countries felt increasingly insecure in their own arms arsenals, and either created their own variants that included aspects of the Russian technology, or took advantage of the USSR’s relaxed copyright laws to create counterfeits. As a result of this further flooding of the international markets, the guns gained a remarkable global presence. While the majority of these guns were officially sold in secure, government contracts, in actuality, the arms changed hands rapidly. In particular, the U.S. was a main consumer, purchasing weapons to aid their
allies abroad, particularly in the Middle East. However, political turmoil and revolution in the allied countries meant the arms holders changed along with the regimes. Consequently, controlling who had access to these guns became remarkably difficult and ongoing production further hindered control. Beyond their widespread presence in the military, the famous Kalashnikovs gained popularity among other violent groups. Terrorist organizations were impressed by the Vietnamese ability to resist the Americans, and saw the guns as a major strategic advantage for the guerrilla fighters. As noted by the New York Times, “Originally intended to strengthen authoritarian states, the Kalashnikov had gained outlaw credibility, morphing to a symbol of revolt, blowback, crime and jihad.” Accordingly, the guns have been used in numerous civilian mass killings, ranging from the murder of Israeli athletes at the 1972 Munich Olympics, to the 2013 mall shooting in Nairobi, to the 2015 attack on Charlie Hebdo offices in Paris. As sales of AK-47s were primarily made through secretive government contracts, it is impossible to know how many have been produced. However, experts offer 100 million guns as a conservative estimate. In addition to gun purchases, loopholes in import/ export laws in former Soviet states enabled the development for black and grey markets for these weapons. Particularly in the Balkans, gunrunning became a lucrative option for citizens burdened by economic failure. As a result, organized networks of illegal gun trade channels quickly emerged, allowing the arms to become ubiquitous in organized crime. These prominent assault rifles drew the intrigue of even civilian non-terrorists. Such powerful guns found following among various groups including gun-rights advocates, veterans, preppers, and fledgling criminals seeking to enter the world of crime. Such groups facilitated the introduction of brutal weapons to the civilian sphere. Moreover, the ease of use enabled terrorist organizations to recruit children and other unorthodox groups such as violent fighters, further blurring the lines between civilian and non-civilian users. The Kalashnikov brand became
ingrained in pop culture globally, establishing an image that exhibited the guns’ hair-raising power. In the popular film Jackie Brown, Quentin Tarantino tagged the AK-47 as the weapon of choice for “when you’ve absolutely, positively got to kill every [expletive] in the room.” In some parts of Africa, Kalash has become a popular name for boys, inspired by the power displayed by AK-47 wielding colonial rulers. Mozambique placed an easily recognizable silhouette of an AK-47 on its flag, in part obscuring the underlying image of a book. Most ominously, in Lebanon, models nicknamed “Bin Ladens” retail for twice the price of AK-47s, due to the popularity stemming from their association with Bin Laden – the founder of Al-Qaeda, the organization that killed 3,000 civilians on the September 11th attacks alone. Today, Russia’s economic circumstances continue to encourage them to tout the AK-47. Sanctions have cut them off from the key American gun market, causing them to search new markets, such as Venezuela, to hunt for customers. In addition, near saturation among military organizations has encouraged the brand to focus its attention on attracting more civilian customers. Moreover, economic factors such as low oil prices have weakened the currency to make the arms more affordable for individuals. As a result, the Kalashnikov company is building the “Kalashnikov Lifestyle” to provide consumers with a patriotic brand that ranges from apparel to shotguns. Already, the line has reported strong sales and found a customer base through its varied public promotions, such as displays rife with colorful balloons in Moscow’s Gorky Park. In 2013, the company announced its rebranding of Osama Bin Laden’s favorite rifle as a “weapon of peace” by emphasizing its connection to “freedom revolutions” throughout Latin America, Africa, and the Middle East. As the current Kalashnikov company has found a lucrative song-and-dance routine to provide the gun with a new public face, this branding of the arms is hugely disconnected from its bloody past. The Telegraph estimates that the death toll due to AK-47s has very likely reached millions. The New York Times found that ISIS has
killed many more with bullets than bombs. The AK-47 has undeniably resulted in more deaths than any other model of firearm in history. From fully-fledged warfare, to horrifying acts of terror, to hometown shootings, few individuals currently remain completely safe from these weapons. While the violent legacy may not live on in the brand, it has surely made a brutal impact on history. Lt. Gen. Mikhail T. Kalashnikov died in December 2013 at the age of 94. Until his death, he remained outwardly proud of his contribution to the Soviet State and advocated for Soviet ideas. Even though he remained largely uncompensated for his invention – he describes his material gains as a sizeable apartment, good car, and comfortable dacha on a lake – he prized his immaterial rewards, such as work and loyalty to the country, noting “there are other values [than financial gain].” Never once did he seem to regret his actions, and if anything, chalked any resulting harm up to political circumstances beyond his control. However, shortly before his death, Kalashnikov expressed his personal, spiritual turmoil to the head of the Russian Orthodox Church. “The longer I live,” he wrote, “the more this question drills itself into my brain and the more I wonder why the Lord allowed man the devilish desires of envy, greed and aggression.” He continues further into the issue of personal responsibility, “My spiritual pain is unbearable. I keep asking the same insoluble question. If my rifle deprived people of life then can it be that I … a Christian and an orthodox believer, was to blame for their deaths?” In 2019, 100 years after Kalashnikov’s birth, Vladimir Putin will celebrate the AK-47 with elaborate, public festivities, enchanting his country with amusement in their national power. In effect, such opportunistic responses throughout the AK-47’s development have ultimately obscured many of the underlying ethical quandaries. While the destructive effects of the AK-47 cannot be undone, the product exemplifies the need to question technological advancement and exciting branding and to consider whether they truly serve to benefit mankind.
Pragmatic responses to changing circumstances in the AK-47’s development cast a steel curtain over the underlying ethical quandaries.
elanie Whelan CEO
Melanie Whelan is the CEO of SoulCycle, an American fitness company that specializes in indoor cycling classes. Whelan oversaw SoulCycle’s July 2015 IPO and has since steered the company through an ambitious expansion plan. SoulCycle has engaged in a variety of philanthropic initiatives, ranging from high-profile, fundraising classes to its “SoulScholars” initiative which provides free classes and educational workshops for disadvantaged high-school students. In 2016, Whelan was named no. 26 on Fortune’s “40 Under 40 List.”
FALL 2016 BUSINESS TODAY
Ayesha Ahmed: Before coming to SoulCycle, you worked at Starwood Hotels, Virgin and Equinox. What are some of the most important lessons you learned at these companies that have helped you in your current position? Melanie Whelan: I’ve been fortunate to have worked for such strong, visionary leaders. During my first year of working at Virgin, I learned that one of Sir Richard Branson’s core philosophies was to take care of his employees first. The employees would then take care of the customers who would in turn take care of the shareholders. This kind of “inverted pyramid” of prioritization was a really unique way of looking at business. Sir Richard walked the walk and talked the talk. This has really informed my view of leadership, especially at SoulCycle where our teams are our greatest asset! AA: SoulCycle is a pioneer in the fitness industry in popularizing the boutique fitness model. As the industry continues to expand and become more innovative with companies such as Peloton offering the ability to stream cycling classes from within the home, how does SoulCycle plan to stay competitive and at the forefront of the fitness industry? MW: SoulCycle pioneered the boutique fitness industry. When the company was founded 10 years ago, there weren’t boutique fitness studios at all. We now operate 66 studios across 14 markets in the U.S. As the world has sped up in the last decade, we’ve seen that our riders have a lot of choices of where and how to spend their time. We view anything that our riders are doing outside of SoulCycle as our competition because what we are really competing for is time. We treat our riders like family and our focus is
FALL 2016 BUSINESS TODAY
on making sure that our riders have a great experience every time they ride. We do this by listening to our riders, understanding their behavior, and anticipating what they want. From the beginning, we’ve viewed ourselves in the hospitality business first - we build our rider communities one rider relationship at a time. It is not one thing, but one thousand things that make the SoulCycle experience unique. AA: SoulCycle’s culture is unique and brings customers back again and again. As the company expands, perhaps internationally, how will you make sure that the culture remains the same? What are some of the challenges that you foresee related to this? Do you worry about dilution of the brand? MW: As we are focused on scaling the business and bringing SoulCycle to more people across the country (and the world!), we’re focused on maintaining the unique elements of our experience and our culture. For us, this comes down to hiring and training great people -- our teams have created the magic of our expansion. I’m a big believer in promoting from within and putting people in positions before they think they are ready. A number of our corporate team members started as front desk staffers, and a number of our studio team members grew to open new studios in new markets. Every single employee goes through our in-house hospitality training and intense on-boarding program. In addition, everyone C-suite through studio teams trains at the front desk greeting riders, handing out shoes and water, setting up bikes, spraying shoes and more. It’s a critical step in understanding our business and helps empower our employees to make on-brand decisions in real time. AA: There are relatively few female CEOs who are as young as you. To what do you credit your success and have there been times where your age and gender have presented a challenge? MW: Growing up, I had an incredibly strong role model in my father who was an entre-
preneur. We lived in Baltimore, but all of his companies were based out of D.C. He woke up every morning at 5:00 a.m. to work out, then he would commute an hour and a half each way to run his businesses. He was a huge role model for me because of his work ethic and discipline. I credit a lot of my success to having parents who prioritized my education and taught me not only the value of hard work but also that anything was possible, which for a girl in 1981 was a powerful idea. While I could give you examples of age and gender challenges, I think the real takeaway is to work your butt off and surround yourself with people who believe in you. Starting with yourself. 86% of SoulCycle’s leadership team is made up of women.
AA: 86% of SoulCycle’s leadership team is made up of women. How is this statistic reflected in the company? MW: 86% of our studio managers are women which is one of the most inspiring elements of what we do at SoulCycle. We’re a female founded and led company and believe in hiring great young people and teaching them as much as possible. When we hire, we look for attitude, aptitude and energy rather than just experience. We then teach our managers as much as we can about community building, entrepreneurialism, marketing and relation-
ship management. When I was our COO, I viewed each of our Studio Managers as entrepreneurs or mayors in their local communities. We are proud that so many young women have made SoulCycle their career. AA: Community is an integral part of SoulCycle in and out of the studio and the philanthropy page of the SoulCycle website describes the company’s projects that give back to local communities. How important is philanthropy in the SoulCycle culture and are there plans to create new initiatives in local communities? MW: Philanthropy is a key pillar of the brand. Since day one, we’ve opened our doors to local charities and raised millions of dollars for incredible organizations across the country. We invite our riders to fundraise in our studios for charities that are important to them. In 2015, we launched our own SoulScholarship program, which brings the joy of movement and the benefits of fitness to underserved adolescents. Through motivational coaching and a supportive community, SoulScholarship gives students the opportunity to experience the transformative impact that exercise can bring to the body, mind and soul while charting the course for a healthier and happier life. We’ve grown the SoulScholarship program and currently work with students in New York City, Los Angeles, Washington, D.C., and Chicago.
SoulScholarship gives students the opportunity to experience the transformative impact that exercise can bring to the body, mind and soul while charting the course for a healthier and happier life.
AA: What advice do you have for undergraduate students who are looking to enter the corporate world in a few years? For undergraduate students, my advice is to get a job and don’t worry too much about what you are doing right out of school. You are going to learn a ton in whatever environment you choose. Just take a job, put your head down and raise your hand. Work hard and volunteer for more projects than you should, so you can learn as much as you can. There is absolutely no replacement for hard work.
FALL 2016 BUSINESS TODAY
Modern Medicine or Modern Business by Ricardo Diaz
FALL 2016 BUSINESS TODAY
magine being incredibly allergic to bee stings. A single sting could be a fatal injury if not attended to immediately. There is a drug that can alleviate any severe allergic reaction in the event of frighteningly crossing paths with a swarm of these fuzzy, yellow insects. You’ve purchased the medication regularly as a preventative measure each year at your pharmacy’s counter. However, now you’re not sure whether you can afford it any longer. The price has ballooned almost six fold in the short span of just eight years. Or picture instead the price skyrocketing by 5,500 percent practically overnight, only this time it’s for a drug you need to combat a parasitic disease. The two scenarios described have become an unfortunate reality for some. Mylan, the pharmaceutical company that owns the epinephrine carrying EpiPen, which treats many allergic reactions, oversaw a steep rise in their product’s price from roughly $100 for a set of two pens in 2008 to over $600 for a pair in 2016. Turing Pharmaceuticals acted in a similar fashion, albeit with a markedly more aggressive surge, in their pricing of Daprim from $13.50 per pill to $750. Daprim is used in the treatment of toxoplasmosis, a parasitic disease that can cause life-threatening complications especially dangerous for babies and those with AIDS. A price hike is hardly ever met with enthusiasm from consumers. However, in this case, its impacts could mean the difference between life and death for a consumer. Both drugs’ price increases were flagged by news outlets, quickly leading to frenzied media coverage placing the companies at the root of the aggressive price increases under intense public scrutiny. The two companies were subject of a series of scathing articles, news segments, and discussions denouncing their so-called predatory actions. A collec-
tive condemnation of profiting in the health sector soon emerged. Public figures from all corners publicly denounced their actions with former Secretary of State Hillary Clinton calling on Mylan “to immediately reduce the price of EpiPens” and Republican Presidential nominee and businessman Donald Trump calling the Daprim hike “a disgrace.” Martin Shkreli, founder of Turing Pharmaceuticals, received a subpoena to appear before the U.S. House of Representatives’ Committee on Oversight and Government Reform. Mylan CEO, Heather Bresch also received a call to testify over the increase. While the public admonishment of these two companies is arguably warranted given their actions, such hysteria also exposes an
The price has ballooned six fold in the short span of just eight years. underlying message regarding the public’s notions of the role of healthcare in our society. The healthcare industry is constantly under pressure to protect the wellbeing of others. The Hippocratic oath, a well-known Greek text used as an ethical code in the field of medicine, says “I will apply...(treatment) for the benefit of the sick according to my ability and judgment; I will keep them from harm and injustice.” Idealistically speaking, caring for others requires a certain degree of selflessness, as the restoration of someone else’s health becomes the focal point. This
oath underscores the association between healthcare and altruism that exists throughout public opinion. In the past, healthcare may have had a less of a capitalistic reputation, due to the romantic image of the industry selflessly helping and serving others. However, in actuality, payment for these goods and services keep the healthcare structure moving. But when the abuse of the system becomes obvious, ethics appear at the forefront of the issue. However, are these ethical concerns misplaced? It’s important to realize that the healthcare industry is run in the same way as any other. There are significant costs associated with the treatment of diseases that must be covered for the practice to continue: attractive salaries are necessary to retain talented practitioners, expensive medical studies must be conducted to advance medications, and the production of drugs must be covered for them to be publicly available. In the United States, a significant portion of the largest health insurance providers are for-profit, publicly traded companies like Aetna, Humana, and UnitedHealthcare. Aetna, for example, is a Fortune 500 company that reported an impressive $2.4 billion net income in their 2015 fiscal year. Pharmaceutical company Pfizer, perhaps best known for producing Advil, amassed $48.9 billion in sales over the past year. These are businesses just like Apple and Coca-Cola: there are reports to write at the end of each quarter and stockholders to answer to. This is undeniably an oversimplification of the matter but succeeds conveying the general idea. These are entities that provide goods to be purchased by consumers. However, the higher stakes of their work justifies the inclusion of oaths and moral values to ensure their commitment to society’s well being.
FALL 2016 BUSINESS TODAY
KOHANA COFFEE Victoria Lynden is the founder and CEO of Kohana Coffee and head of the Alliance Abroad Group. Through her leadership roles, she has promoted cultural awareness by aiding “individuals to expand their cultural horizons.” For example, her organization AIDE has spearheaded numerous social responsibility efforts, including building orphanages in South America, protecting endangered species in Central America, and providing English Language Training to Chile’s Antofagasta region. Lynden approaches her numerous ventures with the mindset, “We must strive to be of service to the world, not just in big ways, but in little ways too.”
NOBODY ELSE HAS Anna Pouschine: On your website, you describe a specific moment of inspiration that led you to establish Kohana Coffee. In what ways was your decision to start Kohana on a whim, and in what ways was it premeditated? Victoria Lynden: Like so many things in life, Kohana revealed itself slowly and in ways that weren’t necessarily clear at the time. The original intention was just to bring this incredible Hawaiian coffee to my store and café in Austin so I could share it with my customers. I thought it was something different and unique and delicious that would help us stand out in the crowd. That idea was somewhat of a whim because it seemed pretty low-commitment. Import some beans, roast and brew them a certain way, and voila! But it wasn’t that simple, and it turned into this whole process of coffee education, of coming to understand the art and science of it all, and that turned into a bit of an obsession. At some point, I suddenly realized it was about more than stocking the café. I was in too deep, and it had sort of accidentally grown into more than a sideline. There was never any “intention” per se until that moment when the true endpoint revealed itself as something more than I’d been thinking it was. That said, I do see a certain unconscious premeditation in the process. You reach a certain point with any obsession where you stop driving it, and it starts driving you. It’s the nature of the beast. You just don’t see it at the time. But underneath the surface, you’re building something whether you intend to or not. And often you don’t know you’ve built it until you’re done. It’s only when you finally stand back in hindsight that you see your path only ever had that one predestined end. AP: What beneficial impacts has Kohana coffee had on you personally, your community, or society at large? VL: That’s such a huge question! Personally, it’s put me into this world of wonderful coffee growers, who love what they do and live a life based on that love. I’m blessed to have this spirit and that attitude inform my own every day. In terms of our community, we’re focused on making Kohana a great place to work and grow as an individual. We’ve cre-
ated jobs, certainly, but I think what we’ve really created is a family that offers support and sustenance that sometimes are more than physical. That belief spreads out into the world from there. Like our staff, we want to help our customers dream big and live the lives they can envision for themselves, and we try to send that message out into a world I think could use it. On a practical level, our coffee supports sustainable practices, and we make donations to lots of organizations working on health care, education, and housing. But the bigger impact we’re aiming for is more of a spiritual one, I think. It’s about empowerment and believing in the power of you. AP: What role does the products’ story – told by its transparent, natural origins, personal care throughout production, and ties
You reach a certain point with any obsession where you stop driving it, and it starts driving you. to Hawaiian culture – play to improve its branding? VL: For me, it’s about authenticity. This is a real product with a genuine, honest, interesting history. Its grown by real farmers, and roasted and brewed by real people, who all have stories of their own. These stories, those people, and the product itself are unique in the world. There’s nothing cookie-cutter about any of it, and I think when you can communicate that, when your brand can tell those stories, there’s nothing cookie-cutter about it either. An authentic brand naturally stands out from brands that have nothing behind their label except a generic product boosted with marketing spend. Our approach at Kohana has been to become part of the story yourself and your brand becomes the recognizable cover of the book that tells it. When people see it, they know they’re not just getting another
cup of coffee. They’re supporting the set of ideals that’s expressed in all those stories. You can’t create branding like that. It’s either organically there or it isn’t. And these days, consumers are smart; they can tell the difference, and they’re drawn to those brands that have something legitimate to say and an authentic story to tell. AP: How do you balance building a successful brand with remaining true to the products’ Hawaiian roots? Can you think of a time when you felt pressure to compromise the authenticity of Hawaiian culture or coffee to advance the product? VL: I don’t see a conflict. In fact, I think about the only way to build a successful brand these days is by being true to its roots and, as I said before, it’s story. Maybe if you have investors with bottomless pockets you can muscle your way in by sheer weight advantage, but for a small company like ours, you have to keep it real or people will move on and find someone who is. We live in a world with thousands of channels and a million products in every one of a billion categories. It’s a crowded, noisy marketplace no matter what you’re selling and hard to get noticed even in the best of circumstances. In that setting, you win by differentiation. And you differentiate by maintaining a true connection to wherever it is that you come form and whatever it is you believe. Nobody else has your story and, if you’ve done it right, your product. To compromise either would be suicide. Sure, there have certainly been times when someone said, “you know, you could make more money by using a cheaper bean or cutting this roasting corner or streamlining that brewing process.” But we’d be just like everybody else if we did. So, no—I don’t even consider it. It’s not what we’re about. And it’s not how we’re going to make it. AP: What corporate social responsibility trend or program do you find most inspiring? Why? VL: I think the B corporation movement is really exciting. The folks at B corporation have made social concerns and the ways in which a business views their responsibility to address them into companies’ DNA. It’s
YOUR STORY... saying, look, financial profitability is just one of our goals, and we’re not going to focus on continually amping up the next quarterly earnings report just to keep shareholders happy, which is the root of much of the damage business causes—constant megagrowth no matter what it costs the world. It’s a declaration of independence from all that says success can be measured in other ways as well, and that we’re going put these other metrics on an equal footing with economic returns, the dual bottom line some call it, and invest in those, too. And if you sign on with us, that’s what you’re signing onto. There’s a power in the freedom to consider your impacts as well as your shareholders that I think has a tremendous potential to change the world. AP: Could you describe your decision to open Cissi’s Market in memory of your mother, and lessons you learned from that experience? VL: It was my mother’s dream to open her own market, and when she passed, I thought the best way to honor her memory, was to create the thing that she had always wanted. It was a way of channeling my grief and keeping her alive in some way. It had her name on the marquee and her spirit in the aisles. And just like my time with Mom, it was a learning experience in every way! I found out just how hard retailing is and how even the best ideas don’t necessarily get the success they deserve. But I think mostly what I learned was that it’s not things that keep people with us once they’re gone. It’s memory. It’s ourselves. When I was running the store, I would always ask myself, what would Mom do? That was always when she was still with me in the best and most real way. But I realized I didn’t need a store to do that. Building a business didn’t keep her spirit alive. Only I could do that. All it needed was me, and that’s a lot simpler and more meaningful, too. That was a big relief to understand. AP: What are some of the most surprising negative consequences of the mass-production approach that you have learned through your experience in the food and beverage industry?
VL: So many food and beverage products, too many, come from a place of maximum, almost merciless efficiency. There’s this constant rush to make stuff ever faster and cheaper in order to wring a few pennies more profit out of it, and eventually whatever it is stops being a real food or a drink and becomes a kind of synthetic simulation of the original product. I think the industry is much too quick to focus on the “mass” instead of the “production” and it too easily substitutes chemical ingredients, endless processing, and shelf-life for real taste and nutrition. If there’s a shortcut, they’ll take it. And if there isn’t one, they’ll try to concoct one. It’s no longer about making food, it’s about making money, and whatever it takes is fair game even if it’s not what’s best for consumers or their health. That ruthlessness was a real surprise.
Keep the conversations focused and keep your eyes on your vision, and you’ll get there. AP: What ethical strengths do you see in your small, artisan company that larger brands may lack? VL: When you’re smaller, it’s easier to hang onto your core values and keep them at the forefront of your operation. You can know most, if not all, of your employees and make sure you’ve brought the right people on board, people who share your beliefs and will bring those values to all the individual decisions they make on the job. Those choices, big and small, are what adds up to an ethical company. It’s what happens when everyone is on the same page and continually acting in accordance with what’s written there. Every company is a sum of its parts, and the biggest most important of those parts are your employees. If they start deviating from your “script,” your company will, too. And the bigger you get, the harder it becomes to make sure that all the different
corners of your business are staying on the right side of that line and working in ethical concert. At a certain point, you’re just too large to maintain the kind of oversight you need to ensure it. You start to get so-called bad apples in there, and if you’re not careful they can spoil your ethics barrel. AP: What lessons do you see your industry learning from Millenials? VL: I think it goes back to authenticity. The Millenials I know are looking for what’s real and true in this world. They’ve come of age as the internet emerged and have kind of grown up in this environment where bigger, faster, cheaper, shinier ruled the roost. Now they’re realizing that’s not really the best way to go, and they’re looking beyond it for something better, something that’s got some meaning to it and isn’t just skin-deep. If they don’t find it, they move on and keep looking whether it’s a job or a product or a place to live. They don’t care that they have to shake things up and make what are sometimes big changes to create the life they want to live. If they don’t like something, they’re out of there. Companies that don’t get this and stick to the old rules will lose this market. And with this generation’s purchasing power now maturing, if you lose Millenials, you lose period. Companies have to keep it real if they want to succeed. A fancy logo and a hollow tagline aren’t enough any more. AP: What advice would you give to Millenials looking to take on an artisanal startup? VL: Keep to your vision. It’s a lot easier than you think to be overly influenced by the people who come on board along the way. They might be staff who have different viewpoints or ideas, or investors who promise cash if you’ll just change this or that. Everybody’s got an opinion, but yours is the only one that matters, and letting yours be the final will bring the clarity and purpose you need to survive and succeed. Perfect your personal art of the “ask” and always know exactly what you want from whoever you talk to so you don’t waste the few precious moments you have of their attention. Keep the conversations focused and keep your eyes on your vision, and you’ll get there.
Beyond Trackin by Victoire Hayek
n today’s college campuses, fitness tracking devices are wardrobe staples for many students. Across campuses, students jog with their Nike + Fuel Bands and wander from class to class with their Fitbits. While many students obsess over their daily step counts, they are unlikely to ponder the role these bracelets will play in their future workplaces. Today, 30 out of the Top 500 companies use the brand Fitbit to monitor their employee health. In fact, according to the Fitbit CEO, businesses are their most rapidly growing user base. Media Planet projects that, by 2018, 13 million employees will have their physical activity tracked by employers. Integrating tracking devices into the corporate world seems an innovative way to lower healthcare premiums for employers by encouraging employees to follow healthier lifestyles. Such monitoring on personal wellness choices, however, is potentially invasive, and thus emerges as an important ethical issue for tomorrow’s workers. While only 1 out of 10 Americans owned a wearable tech device in June 2014, such devices were already set to have a remarkable impact on the healthcare industry. These devices accumulate data, which insurance companies are keen to utilize in their coverage. A survey conducted by Accenture in their Technology Vision revealed that 63
FALL 2016 BUSINESS TODAY
percent of insurers believe these wearables will “transform [the] industry.” According to John Cusano, senior managing director of Accenture’s global insurance practice, the devices “can help insurers break from their traditional business models and provide outcome-based services for their customers.” Both insurers and employers can thus benefit from employees’ Fitbit information. Namely, insurers can use this information while deciding employer premiums, and better lifestyle choices could help decrease the $2.6 trillion annual price of healthcare. According to Kelly Barnes, a consultant for insurers, “If you can take this wearable and I can see a constant level of activity and constant parameters on fitness activities, I’ll take points off your premium… I can set rates on a daily basis as opposed to just once a year.” Likewise, some employers are using their employees’ information to institute rewards or punishments. The company stickK, which specializes in software for corporate wellness, deducts wellness points if employees don’t
reach certain fitness objectives. While such policies aim to encourage positive health benefits, one can argue that they are also a violation of privacy. Furthermore, Fitbit is legally allowed to sell information to employers as well as advertising firms, which many people find concerning. According to Life Hacker magazine, an FCC study revealed that from the 12 tracking devices tested, data was being sent to 76 third parties. The information available is most likely interesting and helpful to insurance companies as it better informs them about their customers. On the other hand, having personal data supplied to unknown businesses could lead to uncomfortable users and dissuade them from using the products. While insurers and employers find fitness tracking devices beneficial for business purposes, doctors do not necessarily share this enthusiasm. Piles of graph from their devices often do not provide much meaningful insight to doctors. Also, while doctors’ equipment has been approved by the U.S. Food and Drug Administration, the wearable tech devices are not validated in the same way. Thus, these tracking devices pose ethical problems because of their reliability, as well as what is done with the accumulated data. Leslie Gerwin, a professor at Princeton currently teaching the class Issues in American Public Health, shared her insights regarding the ethical considerations of fitness tracking devices in these contexts as well as their future evolution. Gerwin noted that the issue lies in whether incentivizing employee fitness is being done to benefit to employer. She stated, “In the ideal world, we would want to see an employer provide these devices as part of demonstrated concern for employee well-being. Thus, an employer who gives time-off for employees to engage in fitness programs, subsidizes gym membership, provides opportunities for employees to make their “quota of steps,” and adjusts expectations based upon individual’s capacity to meet fitness goals (e.g. a wheelchair
bound employee cannot make 10,000 steps) is likely to engender both trust and participation among employees. Ideally, the employer should manifest concern for employee well-being that goes beyond the measurements of a fitness device, such as providing liberal parental leave, allowing personal time off for medical appointments, and monitoring stress levels in the workplace.” Indeed, these sorts of initiatives, such as subsidizing gym memberships, exhibit a genuine concern for employee wellbeing, and would protect an employer from accusations of providing fitness tracking devices solely for financial benefit. Gerwin outlines means by which an employer can ethically utilize a tracking device. “Firstly, they can offer these devices as fully voluntary options and “can make the device available for reduced or no cost to the employee as an incentive to exercise. This is a relatively benign education effort, dependent upon the good will of the employee to use it as intended. A problem may arise if the employer fashions a voluntary program in such a way that it appears coercive to the employee. It is admittedly a rather weak incentive, even if it has a voluntary reporting monitoring program.” Another course of action she supports is including motivational goals with the device. “It can offer an incentive, most likely a financial bonus, to an employee who sets and meets certain goals. Here, ethical concerns arise regarding potential discrimination against those who cannot meet the standards through no fault of their own. Some people have medical conditions that prevent them from walking 10,000 steps, others lack the time. Moreover, since a certain number of steps may be insufficient to promote health, there may be a tendency to add additional criteria that complicates the potential for discrimination and abuse. Some healthy people have congenital or hereditary conditions that cause less-than optimal blood pressure, cholesterol, or weight. Some employees have conditions that they do not wish to disclose
Today, 30 out of the Top 500 companies use the brand Fitbit to monitor their employee health.
FALL 2016 BUSINESS TODAY
to anyone, most especially their employer. If the employee is qualified to perform the work for which she was hired and is indeed performing that work, is it the employer’s responsibility to mandate how many steps she should walk? One person’s incentive, is another’s penalty, if they are unable to qualify for the additional money due to issues that are not job-related.” Finally, Gerwin notes the many ethical issues that employers would face given their intrusion on employee health and fitness. She states, “For any participant in an employer-monitored wellness program, the issue of privacy has to be of some concern. Will the employee be required to give the employer access to all medical information? Might the employer eventually use such information to subtly “ease out” an employee he believes is in danger of developing an expensive medical condition that will raise insurance rates? Can an employer be trusted to develop a secure system in which a company fitness officer has sole access to one’s health information, which cannot be shared with an employee’s supervisor or other company officials?” With the both the risks and benefits of fitness tracking devices in mind, the key consideration is whether these electronics will become integral parts of American healthcare and affect graduating college students. Gerwin recognizes the beneficial ends are not necessarily driven by impressive means. She says, “While I claim no prognostication expertise for the future health of the American public, I do not see these devices as revolutionary. To the extent that they incentivize the wearer to achieve some fitness goal, I think they are a useful tool. If, for example, my co-worker across the hall chooses to ask me a question in person rather than send me an email so that she must get up from her desk and walk a bit, I think that, in most instances, this not only fosters good health habits but promotes collegiality. The devices by themselves provide little health benefit
except as a prod to adopt some good health practices. As your questions indicate, the use of such devices by the employer holds the potential for abuse. This is not to say that employers do not have an important role to play in promoting the public’s health. In particular, if they want to encourage use of these devices, and accompany their investment with providing opportunities for exercise and promoting other healthy behaviors such as healthy diets, enabling full nights’ sleep, and stress reduction, they will really contribute to their employees’ health.” While wearable tech has a unique appeal, being at once an electronic and a wardrobe staple, its likely faddish nature means that it does not replace comprehensive healthcare measures. Gerwin notes the importance of pushing for more widespread change, “It is a step in the right direction to provide Americans access to health care, but without investing in the infrastructure and programs for prevention that go well beyond individual monitoring devices, we will not significantly improve Americans’ long term health.” The trackers are regularly upgraded and new products are launched. However, consumers are unlikely to have more than one of these gadgets on their wrists. After releasing the Fitbit Flex in May 2013, the company released the Fitbit Charge HR, Fitbit Surge, and new colors of the Fitbit Charge in January 2015. This constant evolution poses a threat to the integration of fitness tracking devices in the workplace, pushing for employers to allocate a considerable budget to both the devices themselves and a team to manage the data. Moreover, with increasing accuracy and advanced features, dishonest employers must resist the growing temptation to misuse the data for discrimination and financial gain.
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