Business_PittBusiness magazine 2009

Spring 2009

Thought Leaders: Healthy Discussion for an Ailing Economy

The Business of Humanity: A Model for the New Economy

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Dean’s Message

Feature Thought Leaders Alumni News and Events

Published by the University of Pittsburgh Joseph M. Katz Graduate School of Business and College of Business Administration

It would take many magazines and pages to answer these questions completely (and many more to answer all of the related questions that people have). The goal of our contribution to the debate is not to answer all the questions, but to provoke your thinking and to offer insights into the situation.

We must understand why the current crisis occurred to solve it. Blaming may be convenient, but it will not solve the problem or restore confidence.

Dean John T. Delaney Senior Associate Dean Laurie Kirsch Director of Marketing Communications Kate R. Ledger Director of Publications/Editor Leigh Ann Wojciechowski

Table of Contents Dean’s Message ......................................................................................................... 1 Feature: Professors Look to Bring the Human Element into Business Models .................. 2 Alumni Profiles ........................................................................................................... 6 Thought Leaders: Healthy Discussion for an Ailing Economy ......................................... 12 Around the School..................................................................................................... 17 Student News ........................................................................................................... 23 Alumni News and Events............................................................................................ 26

Writers Lauren Gogal Niki Kapsambelis Elizabeth Strohm Contributors Amy Benscoter Orlana Darkins Jennifer Mailey Greevy Amanda Leff Steven Richardson Jim Waite Linda Werner Photography Tom Altany Photography AREVA NP, Inc. CIDDE Terry Clark Photography Ric Evans Photography Dennis Galletta Lauren Gogal Joseph Hadinata Photography Shades & Shadows Photography Yos Photo Department of University Marketing Communications Communications Managers Kelly Kaufman Jolie Williamson Art Director Jane Dudley Proofreader Sarah Jordan Rosenson Production Coordinator Chuck Dinsmore Contact Information University of Pittsburgh Joseph M. Katz Graduate School of Business and College of Business Administration Office of the Dean 372 Mervis Hall Roberto Clemente Drive Pittsburgh, PA 15260 Web: www.business.pitt.edu

The University of Pittsburgh is an affirmative action, equal opportunity institution. Published in cooperation with the Department of University Marketing Communications. UMC67092-0409

Contact the editor of Pitt Business with comments, suggestions, or story ideas: newseditor@katz.pitt.edu

caused the problems to occur? Who is to blame? How can we correct the situation and avoid its reoccurrence?

Who should pay for the current mess?

Thought leadership is about informed solutions. In the midst of the economic crisis and recession facing the world, well-thought-out options are needed to revive growth and facilitate the changes that will improve people’s well-being.

In this issue of Pitt Business, we feature the informed thinking of several faculty members. Our thought leaders, Jeff Inman, Carrie Leana, and Jay Sukits, provide insights relevant to the current economic problems and propose ideas related to how the United States should proceed (see page 12). In tackling the most difficult problem of our generation, it is unsurprising that some differences of opinion emerge in their views. Such healthy, respectful differences uncover the main dangers of the current environment. How do you balance an appropriate amount of government involvement in the economy without tipping the situation in a way that unhinges markets? And what role should government play in managing business interactions? Jeff, Carrie, and Jay reach somewhat different conclusions—while admitting that we are in uncharted territory.

The current crisis has caused much questioning across the world. What

Long-run solutions are needed to address the problems. In this regard, Jay raises an interesting point about the subprime mortgage crisis. He suggests that the inability of investors to know the composition of the mortgagebacked securities that they purchased caused the market to devalue all such securities, even though problem mortgages constituted only about 11 percent of those securities. Because the current securitization system cannot easily trace individual mortgages included in the various mortgage-backed security products, the value of mortgage-backed securities has plummeted to near zero.

Recently, Pitt alumnus Philip Moyer, chief executive officer and president of EDGAR Online, Inc., spoke at the Katz School about this very issue. He is on a task force working to create a taxonomy that will tag mortgages so they will be easily traceable and identifiable regardless of how they are packaged into a securitization product. The approach uses eXtensible Business Reporting Language (XBRL), which is a standardsbased method for presenting business and financial information. Moyer’s company helps publicly held firms file government financial reports using XBRL. The approach improves transparency by making information available quickly and widely. In this regard, the project to record mortgages using an

“In the midst of the economic crisis … well-thought-out options are needed to revive growth and facilitate the changes that will improve people’s well-being.”

XBRL taxonomy would dramatically reduce the likelihood of future subprime mortgage crises. This is another example of how Pitt is providing thought leadership to the nation. Beginning with the practical intellectual capital of our faculty, we offer students, alumni, and the community the ideas needed to make a better world. We are proud when we see signs that they are using their skills to create positive outcomes.

Thought leadership does not arise in a vacuum. It requires healthy discussions and differences. In the end, I believe it must be combined with caring to create good outcomes. We lead when we work to make everyone better. To help students and alumni deal with today’s employment uncertainty, I sent an e-mail to MBA alumni announcing new career services resources that have been dedicated to the problem. For more information, visit www.katz.pitt.edu/ career-resources (login: katzalum, password: getAjob). Please give the school your e-mail address so we can reach you quickly with such messages.

I wish everyone well during these difficult times and invite you to help us think and care our way through the global recession. By working together, we will provide true thought leadership to all.

Sincerely,

John T. Delaney, Dean Joseph M. Katz Graduate School of Business and College of Business Administration

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Professors Look to Bring the Human Element into Business Models John Camillus and Bopaya Bidanda are intrigued by the likelihood that, of the “big three” automakers, Ford Motor Company appears to be the one most able to survive the economic recession intact.

If you ask them, they’ll tell you it is due significantly to the humane ideals that Ford has embraced in recent years: making quality “job 1,” giving missioncritical importance to sustainability, and emphasizing diversity and gender equality among employees. Ford’s cars today match the reliability of those produced by Japanese automakers. It has created what is acknowledged to be by far the best midsized hybrid car on the market. Its female car designers were the first to develop adjustable foot pedals to keep women from pulling their seats dangerously close to the steering wheel. And Ford’s workers in rural Brazil, many of whom have no previous industrial experience and half of whom are female, run one of the most advanced, flexible, and productive car manufacturing operations in the world.

John Camillus, Donald R. Beall Professor of Strategic Management (left), and Bopaya Bidanda, industrial engineering department chair and Ernest E. Roth Professor at the Swanson School of Engineering

“Ford’s humanity-oriented decisions have helped them get into the relatively positive situation they are in now,” says Camillus, Donald R. Beall Professor of Strategic Management at the Joseph M. Katz Graduate School of Business.

Camillus believes Ford and other companies have demonstrated what he continued

Accounting for human factors such as safety, quality, employee satisfaction, diversity, social sustainability, and environmental impact will have an immediate positive effect on the bottom line as well as enhance longterm viability and naturally create a more robust company.

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Camillus and Bidanda define “humanity” two ways: humaneness, which covers issues such as ergonomics, safety, and good design, and humankind, meaning that businesses recognize the value of serving a range of economic strata and respond to the global nature of the economy. expects the rest of the business world eventually will recognize: that accounting for human factors such as safety, quality, employee satisfaction, diversity, social sustainability, and environmental impact will have an immediate positive effect on the bottom line as well as enhance long-term viability and naturally create a more robust company.

For too long, companies around the world have acted as though they function in a vacuum, without influence on or interest in the problems around them. To tackle such issues, some would argue, would draw attention away from return on investment (ROI), profit margin, and other traditional measures of a company’s economic health.

A multidisciplinary team of researchers at the University of Pittsburgh, led

by Camillus and Bidanda, industrial engineering department chair and Ernest E. Roth Professor at the Swanson School of Engineering, are looking to shift the primary focus of business decisions from short-term accounting profits to a set of criteria they have assembled under a rubric labeled the Business of Humanity. They hope to demonstrate that their approach effectively addresses some of the most complex problems companies are facing today—and that it is better for business as well as humanity.

In their research, Camillus and Bidanda have found evidence suggesting that, in reality, a company’s future is inextricably tied to that of its multiple stakeholders. “One of the things we want to do,” Bidanda says, “is share with industry [that] putting the person back into the equation makes a huge difference.”

Significant Social Institutions Throughout his career in both academia and consulting, Camillus has acted on the belief that a company’s health and fortunes cannot help but be influenced by the way it relates to each of its key stakeholders: employees, customers, shareholders, and surrounding communities. He feels the most successful enterprises see these as symbiotic relationships and recognize that they are significant social institutions—not just engines of profit. “Profits are a consequence of creating and offering value to individuals and society, and businesses must recognize this hierarchy,” he says.

Twenty years ago, investing in quality was seen as detracting from immediate profits. The shift in thinking “went from quality as a cost to quality is free,” says Camillus. “It doesn’t cost you anything [to improve quality]. It actually enhances profits.”

Companies that invest in quality improve their processes and products, Camillus says, and this means there are fewer rejections in the manufacturing process, production costs decrease, fewer warranty services are required, customers are happier and loyal, and products can be priced higher because customers will pay a premium for a superior product.

He cites Apple Inc. as one example: The iPod can command a higher retail price than an off-name MP3 player due to its perceived higher quality in addition to the value it provides because of its link with iTunes.

Defining Humanity Camillus and Bidanda define “humanity” in two ways: humaneness, which covers issues such as ergonomics, safety, and good design, and humankind, meaning that businesses recognize the value of serving a range of economic strata and respond to the global nature of the economy.

The humankind concept suggests there is value in serving the large populations of low-income families and individuals that exist throughout the world, particularly in developing countries. Camillus cites the cell phone market in India as an example. Every month, 9 million cell phones are sold in India—a staggering number that rivals the entire population of small countries. The reason is that companies are producing inexpensive, functional phones that can be sold to poor people. Airtime in India is the cheapest in the world, so now the rural farmer, when negotiating with a middleman, can call to find out what price his crops should bring in distant markets and the housewife can rent her phone to neighbors, which increases her family’s income and their ability to buy more goods to improve their lives.

By serving the needs of an often-forgotten population, businesses are making billions, says Camillus. And case studies show that the technological innovations that enable companies to serve these markets at very low price points stimulate new and better products that then can be targeted to higher-income segments.

To illustrate humaneness, Camillus talks about designing assembly lines that are worker friendly and improve productivity. Bidanda points to the embedded communications solutions and research and development company Sasken Communication Technologies, Ltd., which is headquartered in India, for another example: Before employees take pay cuts, executives reduce their own salaries. Before employees are laid off, management thins its own ranks.

“That would be unheard of in the United States,” says Bidanda.

When organizations put the rank and file first, employees are more likely to act in the company’s best interest, because they see it as inextricably tied to their own, says Camillus. These companies earn the hearts and minds of their employees instead of just buying their time; they recognize employees possess critical knowledge that is the source of continuing competitive advantage.

To build their case, Camillus, Bidanda, and the rest of their research team are taking a multipronged approach. The team is preparing a series of case studies on companies from around the world, with two or three each from the Czech Republic, Brazil, the United States, and India already under way. Case study leads also have been identified in Russia and China.

“Companies outside the United States have long studied the United States as a role model,” explains Bidanda. “But now what we’d like to do is study best practices around the world and bring that to bear here.” The companies studied employ the Business of Humanity principles, and the professors plan to study the approach to and effects of the business decisions in each case. In addition to the case studies, the team will conduct empirical analyses employing classical event study methodology with large sample sizes.

Team members also plan to employ Web 2.0 approaches to enrich their studies with input from a worldwide network, and, in 2010, they intend to hold a conference at Pitt and invite academics and business practitioners to share progress and shape future efforts.

Untangling ‘Wicked Problems’ One of the concepts about which Camillus has written is that of “wicked

problems,” a term that describes complex issues with multiple causes and no correct answers. The wicked problem, he writes in Harvard Business Review (May 2008), involves multiple stakeholders who have different and conflicting priorities.

“If you look at the notion of humanity, we are talking about multiple stakeholders,” he says. “Managers have, in a sense, ignored the complexities of business decisions and applied traditional problem-solving methods more suitable to well-defined problems with clear-cut alternative solutions.

“Business decision making that focuses on singular measures such as profits and ROI fails to recognize the intrinsic inadequacies of such measures. They are susceptible to manipulation in a variety of ways. And accounting profits based on historical costs do not necessarily map well onto economic profits, which are based on opportunity costs.

Beyond that, they do not reflect the goals of a variety of stakeholders. This is where the criteria suggested by the Business of Humanity and the processes suited to wicked problems come into play.”

It’s not that the Business of Humanity disregards profits, he continues. In fact, the contrary is true. Camillus believes this project is different from those that stress the importance of corporate social responsibility on moral bases and as a social imperative, as it is intended to demonstrate that employing humanity

as the basis for decision making grows profits and makes good business sense.

Ripe for New Thinking?

Though Camillus recognizes that getting the business world to embrace the concept of humanity-centered thinking as the basis for profitability would represent a major culture shift, he believes the time is right to begin what he describes as “a continuing effort,” particularly because of the stresses that businesses currently are experiencing.

When businesses are struggling, some will be more open to new concepts and alternative approaches as a means of curing what ails them, he points out.

And if that’s the case, it is the particular responsibility of universities to show how to make better approaches work.

He notes: “I don’t think in a professional school you can forget your responsibility to positively impact business.” Toward this end, the project seeks to describe how best-practice companies make humanity-based decisions and identify and estimate the economic effects of these decisions.

Without putting workable theories into practice, “it’s like a tree falling in the forest with nobody there to hear it.”

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Alumni Profiles

Thomas Christopher, 2008 Distinguished Alumnus

The Business Alumni Association of the Joseph M. Katz Graduate School of Business and College of Business Administration (CBA) annually honors alumni for their professional achievements, leadership skills, and service to the University community and the community at large. In May 2008, four alumni were recognized as distinguished alumni and a fifth received the H.J. Zoffer Medal for Meritorious Service. Winners of the 2008 Distinguished Alumni Awards and the Zoffer Medal are profiled on the following pages. Katz and CBA are proud to recognize the outstanding achievements of their alumni and to celebrate their successes.

“My feeling was [that] to move up in the managing ranks at Westinghouse, I’d need a better understanding of finance and accounting and also of the growing legal aspects of business,” Christopher says.

Though he enrolled in 1975, attending graduate school at night, an accident that cost him one of his eyes interrupted his studies. He returned and was able to graduate in 1980.

“I enjoyed the professors,” he says.

“One was the CEO of his own business, and that dialogue was very interesting.

To get an outsider’s view of the things I had seen inside the company was very useful; it gave me a level of comparison and a broader perspective.”

In 1995, Westinghouse moved Christopher to Orlando, Fla., to work in its power generation business, where he stayed for five years before he assumed his current post with AREVA in Lynchburg, Va. With nuclear energy taking a more prominent role in the national dialogue about energy independence, business has been booming.

Nuclear Engineer Applies MBA to Keep Power Plants Healthy As the president and chief executive officer of AREVA NP Inc., Thomas Christopher logged 140 days in the air last year, traveling from customer to customer in the high-stakes, intensely demanding nuclear energy industry.

So it’s no surprise that Christopher, who was named one of the Katz School’s distinguished alumni in 2008, is looking forward to his retirement in 2009, when he plans to play golf, spend time with his family, and generally find out how the other half lives.

“It’s a unique market; it’s a unique business,” he says of nuclear energy production. “Most other businesses have hundreds, if not thousands, of customers. Here, you only have 24 customers. And they spend $22 billion a year, every year, and they demand a lot of your time. It’s a high-stakes game, [with] high risks, high rewards.”

Shortly after taking the Westinghouse job, he decided to pursue a Master of Business Administration degree at the University of Pittsburgh.

Customers know Christopher well; he has been to every nuclear plant in North America, South America, and Europe. They also know his wife, Dale, and their five children. The reason for the intensity is obvious: If a unit shuts down, a utility can hemorrhage as much as $1 million a day.

“If you like problem solving and decision making, this is the business for you,” he says. “The work requires much more customized engineering than industries such as automobile production. Our field engineers go to the site, turn the portable manipulators and robots loose, start inspecting the components, and establish repair programs in real time.”

The rewards are high—a 60-day job can bring an engineer a bonus check of $5,000 or more—but there is virtually no margin for error; after all, the plant in question is dealing with nuclear power.

Fortunately, Christopher, the son of a U.S. Navy aviator, is well accustomed to approaching new situations head on.

He attended six grade schools and two high schools before enrolling in the U.S. Naval Academy to earn a bachelor’s degree in mechanical engineering.

A master’s degree in engineering mechanics from Georgia Institute of Technology followed before he took a job with Westinghouse in Pittsburgh, where he stayed from 1973 to 1995.

“It’s a remarkable time for the industry,” says Christopher, who notes that increased demand for electricity, combined with the effects of rising fuel costs of natural gas and coal-fired plants, has led to a new cycle in which new nuclear plants are getting licensed.

“This time, we’re going into the new construction period with 30 years of experience behind us,” he says.

“The operating units are performing extremely well, and the new ones will perform even better. They’re very valuable for the U.S. economy.”

“It provided me with a foundation for not just a career but for a life. The inspiration that I got [at Pitt] during my PhD education is that it’s about a lifelong love of learning.” —Rohit Deshpandé Global Marketing Expert, Harvard Professor Inspired by His PhD from Pitt As Rohit Deshpandé was earning his doctorate from the Joseph M. Katz Graduate School of Business, Pittsburgh was transforming itself from a Rust Belt icon to a Renaissance city—a fitting backdrop for the education of a man who would go on to study marketing in emerging economies.

“It provided me with a foundation for not just a career but for a life,” says Deshpandé, the Sebastian S. Kresge Professor of Marketing and Henry B. Arthur Fellow for Business Ethics at Harvard Business School. “The inspiration that I got [at Pitt] during my PhD education is that it’s about a lifelong love of learning.”

After earning his MBA from Northwestern University, Deshpandé, who was named one of the Katz School’s distinguished alumni in 2008, went back to his native India to work in industry.

A part-time teaching stint at what was then the University of Bombay made him realize that academia was where he wanted to build his career. He wrote to one of his MBA professors for advice, and that advice led him to the University of Pittsburgh to work with then Albert Wesley Frey Professor of Marketing Gerald Zaltman.

“A PhD program is much more like an apprenticeship, rather than like a traditional, formal graduate education,” explains Deshpandé. “The person you work with teaches you the craft of research.”

He arrived at a time when Pittsburgh, which was emerging from an economic recession, was rebuilding its downtown as well as its image as the “City of Champions,” home in that time to national trophies from Pitt football, the Steelers, and the Pirates.

“There was a can-do attitude about the city, which was very inspiring,” notes Deshpandé, who earned his PhD from the Katz School in 1979. “It was a wonderful time to be in Pittsburgh.” continued

Rohit Deshpandé, 2008 Distinguished Alumnus

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His research interests focus on global marketing strategy, a discipline that has assumed a new importance as the nation’s economy becomes more heavily influenced by the rest of the world. Deshpandé believes business schools, which tend to study Western companies and their methods of marketing products and services, take a very U.S./Euro-centric approach.

He summarizes his experience at the Katz School with an acronym that spells Pitt: people, inspiration, trust, and thankfulness. At Pitt, “there was not this sense of professor and student so much as a senior colleague and a junior colleague,” he says. “I have learned that the best results come when students are coached rather than taught.”

“I think the future belongs to companies and to thought leaders from emergent economies,” he says, particularly those in the “BRIC” group—Brazil, Russia, India, and China.

Melding Disciplines, Alumnus Becomes Trusted Financial Advisor

He cites the examples of Embraer S.A., the Brazilian aircraft manufacturer that makes most of JetBlue Airways’ fleet; Russian Standard, a company that makes ultra-premium vodka as well as offers financial services; and Tata Sons Ltd., the Indian company that recently acquired both Tetley USA Inc. and Jaguar Cars Limited.

“These are companies that most of us are just beginning to learn about, but I think they are the potential marketing powerhouses of the future,” Deshpandé says. And while business schools are intellectually up to the challenge of teaching a more globalized approach, “we still tend to think of the best marketing practices as coming from home, and that just ain’t so.”

In addition to his academic research, Deshpandé also has served as a principal in a marketing research consulting firm and an electronics manufacturing company. He believes that field work should infuse all aspects of a business school education, particularly in case study research.

“I think of business schools as being closer to schools of engineering than to colleges of arts and sciences,” he says.

“We’re very engaged with problems of practice, and the work that we do, ideally, is an extension of the problems of practice.”

Frank Domeisen was already an accomplished veteran of the business world and a certified financial analyst when he and a couple of other partners decided to buy out the owners of Pittsburgh-based investment consulting firm Yanni Partners.

“That was hard, but it was rewarding at the same time, because it was the integration of many different disciplines,” he says. “It became much more dynamic trying to synthesize the technical element and the business management of the firm.”

For most of his professional life, Domeisen has been fascinated by the marriage of different but complementary skill sets. Initially trained as a mechanical engineer, the New England native—who worked part of his way through an undergraduate degree at the University of Connecticut as a ski instructor—came to Pittsburgh to work for Westinghouse.

He attended night school to earn a master’s degree in mechanical engineering at Pitt but became intrigued by the effects that strategic planning and

But it was then that he discovered a renewed appreciation for the education he’d Frank Domeisen, 2008 Distinguished Alumnus received 17 years earlier at the Joseph M. Katz Graduate School of Business.

“A lot of what I took for granted and plodded through [during] my course work came back in gory detail in 1999,” says Domeisen, who graduated from the Katz School in 1982 and was named one of the Katz School’s distinguished alumni in 2008. “All those courses that were kind of sidebar courses at the time became the main entrée.”

Domeisen took on responsibility for the company’s investment and consulting platform, and he and his partners took on the day-to-day responsibility of managing the company.

“The underlying fundamental is to be a trusted advisor, and these are the times when, hopefully, you can deliver that.” —Frank Domeisen finance could have on the profession.

So shortly after obtaining his engineering master’s, he enrolled at the Katz School full time.

His engineering background made him a sought-after classmate for study groups because his quantitative focus helped with economic analysis. It was in one such group that he met his wife, Michelle, who also graduated from the Katz School in 1982 with an MBA and worked as a commercial real estate broker for about two decades.

“At the time, the word was if you had an MBA along with an engineering degree, you could write your own ticket,” he says. “My thought was that I would be integrating an MBA with my engineering background and get into technical marketing or strategic planning and business development.”

But an economic recession made for a tough job market, as did potential employers who could not envision a role for a master’s-level engineer who also was trained in finance. Domeisen graduated with two offers: one in engineering and one in finance, at Mellon Bank. He chose the latter, figuring he could build the experience that would help him break free of his engineer label.

Ironically, he wound up back at Westinghouse a few years later, working in corporate finance for Westinghouse Credit. And a few years after that, in 1994, he joined Yanni Partners.

Domeisen, who had resisted pigeonholing for so long, had finally found the flexibility he sought. His adaptability has helped him to shepherd the business through its many incarnations, including an acquisition in early 2008 by Gallagher Benefit Services, Inc. Today,

the firm Yanni Partners, a division of GBS Investment Consulting, LLC, continues to provide investment consulting services to institutional clients representing $17 billion in assets across 22 states.

“It’s kind of like the liberal arts of investments,” he says. “You have to not be a specialist in any one segment; you’ve got to be a generalist and know how all the various pieces fit together.

It’s very much a top-down integration of many different ideas.”

The challenges of the current economy test the mettle of the consultant, he adds: “The underlying fundamental is to be a trusted advisor, and these are the times when, hopefully, you can deliver that.”

Nurse Applies Business School Savvy to the World of Managed Care A background as a surgical nurse gives Cynthia Zydel the medical expertise to discuss diseases and case management at the managed care company where she works.

But it was the MBA she earned at the Joseph M. Katz Graduate School of Business that allowed her to rise to vice president of strategic planning and Medicare at Gateway Health Plan.

“People think, ‘A nurse with an MBA: That’s interesting,’ ” says Zydel. “And because I’ve worked on what I call the ‘other side,’ the provider side, I think it gives me a very strong perspective on the needs of the members.”

Zydel, who was named one of the Katz School’s distinguished alumni in 2008, worked in neurosurgery and orthopaedic

Cynthia Zydel, 2008 Distinguished Alumnus

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“There’s something about graduate school that opens that entrepreneurial side in a lot of people’s heads, and it did [in] mine.” —Cynthia Zydel surgery for seven years before moving into middle management positions at two different hospitals. “Even at the time I was on the hospital side, I was working in utilization management, which looks at health care costs, how much time people are in the hospital, and the business impact on the hospital and the cost of care,” she says.

During this time, Zydel was considering an advanced nursing or public health-related degree. Her then boss, a Katz School alumnus, got her thinking about an MBA. And the more Zydel thought about it, the more she realized it was the right fit.

Six months before graduating from Katz, she accepted a position at what was then Sewickley Valley Hospital, where she spent three years as vice president for quality. She graduated from the Katz School in 1991, and while she had a good job at Sewickley Valley, she decided to go out on her own as a consultant.

“There’s something about graduate school that opens that entrepreneurial side in a lot of people’s heads, and it did [in] mine,” she says.

She founded a Pittsburgh-area health care consulting firm, working with hospitals, physician practices, and Gateway Health Plan. In 2005, she accepted the vice president’s position at Gateway and immediately assumed responsibility for its new Medicare product, which launched in early 2006.

With the worlds of business and health care intersecting more each year, the idea of a health-focused MBA is more common today than it was in 1991. Even so, Zydel says the business fundamentals she learned then have carried her throughout her career, whether it was in consulting or with Gateway.

“I definitely think the case studies were helpful,” she says. “When you look at the decisions that are made that lead to [a company’s] ultimate demise, you can see the turning point.”

New Venue, New Format Plan to Attend the 2009 Business Alumni Association Awards Program

An Act of Patriotism Rallies Katz School Community Around Soldiers If you combined the patriotic mission of the USO with the business acumen of an MBA, the result might very much resemble Operation Troop Appreciation. Founded by Kristen Holloway Querriera when she was an MBA student at the Joseph M. Katz Graduate School of Business, OTA—as it is affectionately known—began with a simple premise: to grant a simple request from troops in Iraq.

Querriera, who works for PPG Industries, had a coworker whose brother was serving overseas. The coworker reported that his brother was a member of the military police patrolling the green zone in Baghdad, where he and the other 48 members of his platoon had to fight temperatures ranging from 90 to 130 degrees. As a result, moisture-wicking Under Armour T-shirts—which are made from a fabric that keeps sweat off the skin—were high on their wish list.

“My first question was ‘What’s a platoon?’ and my second question was ‘What is Under Armour?’ ” says Querriera, who graduated in 2005.

“I was a little naive getting into this, I guess.”

When she asked friends and family members to donate $25 apiece to sponsor the soldiers, she got enough to buy 117 shirts. And thus a project was born.

“He said absolutely, go for it,” says Querriera. One classmate who was pursuing joint degrees in business and law helped to obtain a donation of legal fees. Others volunteered to stuff envelopes or provide accounting, information technology, or marketing expertise.

To date, OTA has granted wishes for more than 45,000 soldiers, and 98.5 cents of every donated dollar goes directly toward supporting the troops.

In addition to heat-fighting shirts, soldiers also have received children’s clothing to distribute to local Iraqis, weight-lifting equipment, fire-retardant work gloves, global positioning systems, mine detectors, and boots, among other items.

Though the military supplies soldiers with essentials, Querriera says OTA provides supplements that are sometimes more luxurious than standard-issue items. On one day in late November 2008, OTA was shipping 2,000 pounds of supplies from its donated space in Pittsburgh’s Shadyside neighborhood.

The experience also enhanced Querriera’s business school education by giving her a real-world laboratory in which she could apply the skills she learned. The experience “gave me the skill set and the confidence and wherewithal to make a career move at PPG,” says Querriera, who left finance to move into a more commercial role in the sales department.

May 14, 6–9:30 p.m.

Senator John Heinz History Center, Pittsburgh Business Alumni Association 2009 Honorees Corporate Appreciation Award Deloitte, Accepted by Bob Denove, Managing Partner H.J. Zoffer Medal for Meritorious Service Award Sy Holzer, President, PNC Bank Distinguished Service Award Kazunobu Nakao (MBA ’94), Owner, Nakao International Human Resource Consulting

Distinguished Alumni Award Andrew Hannah (MBA ’92), President and CEO, Plextronics, Inc. Jeff Kelly (MBA ’76), Chairman and CEO, Hamill Manufacturing Company Delena Spencer, (MBA ’92), Vice President and Controller, High Volume Analog and Logic, Texas Instruments, Incorporated

For more information and to purchase tickets, visit www.business.pitt.edu/alumni/events/may14-2009.html.

“As the thank-you letters began rolling in from the troops on the receiving end of this project, I was just really inspired to do something bigger,” says Querriera, who was awarded the 2008 H.J. Zoffer Medal for Meritorious Service from the Katz School.

With an eye toward putting her business education to use, she approached then dean Rick Winter about getting support from the Katz School to create a nonprofit organization.

Kristen Holloway Querriera, H.J. Zoffer Medal for Meritorious Service Honoree

“Just having the day-in, day-out knowledge from OTA really helped me with this job, more so than if I had moved into it from finance without having had this experience,” she says.

The personal benefits were tangible, too: In May 2005, she began corresponding with Charles Querriera to get some items for his armored company. The two maintained their connection, and she met him in person when he

returned from Iraq in January 2006. The couple began dating and were married in June 2008.

As for the future of OTA, Querriera says it will remain in place for the duration of the war.

“The war touched a lot of lives,” she says. “But there are also a lot of people who don’t have a personal connection and want to support the troops. We are about the men and women who are over there. We want people to feel connected to these soldiers.”

To find out how to support OTA, visit operationtroopappreciation.org.

“The war touched a lot of lives. … We are about the men and women who are over there. We want people to feel connected to these soldiers.”

—Kristen Holloway Querriera

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Thought Leaders With a national deficit running into the

The Homeowner’s Crisis

trillions, foreclosures and unemployment

When Jay Sukits picked up a copy of USA TODAY and saw a poll asking everyday Americans to identify who was responsible for the mortgage disaster, he was pleasantly surprised: Contrary to what he’d been hearing on the news, most people seemed to get it right.

spiking at levels that haven’t been seen in generations, and words like inflation and recession creeping back into the evening news, one thing is certain: The sagging economy is a problem that will defy any simple solution.

The complexities of the economic crisis demand strategies that cross political and fiscal ideologies, for they touch virtually every aspect of society’s spectrum: education, housing, employment, health care, and retirement.

Toward that end, Pitt Business faculty members shared their opinions on the fallout from the current crisis and what can—and should—be done to hasten recovery.

Healthy Discussion for an Ailing Economy

According to the poll, most respondents felt mortgage lenders were to blame, followed by banks, then the government. What Sukits expected to hear was that Wall Street moguls were responsible. And that, he says, simply isn’t so.

Sukits, a clinical assistant professor of business administration, feels qualified to make that assessment. He spent 20 years working on Wall Street and says as long as Fannie Mae and Freddie Mac maintained credit standards, mortgage defaults remained at acceptable levels and there were very few problems.

The trouble began, in his opinion, when the Community Reinvestment Act was amended in the late 1990s, allowing the two lending giants to relax their credit standards and finance mortgages for unqualified buyers.

“They threw those standards out the window, and they did so because of enormous pressure from politicians and lobbyists from the home builders associations,” says Sukits.

The subprime mortgages were mixed in pools with loans that deserved top ratings, and firms that bought them had no means of deciphering that they had just taken on bad debt, Sukits says.

J. Jeffrey Inman, the Albert Wesley Frey Professor of Marketing and professor of business administration, believes continued

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dollar, Sukits says.

That would reduce the need to use taxpayer money to alleviate the crisis and mimics the method used to address the thrift industry failures of the late 1980s, he says.

“They threw … standards out the window, and they did so because of enormous pressure

Buying up mortgagebacked securities would drive down rates in the residential mortgage market, allowing people in danger of defaulting to refinance at lower rates, he suggests.

from politicians and lobbyists from the home builders associations.”

—Jay Sukits

homeowners who took on mortgages they couldn’t afford also bear some responsibility for the crisis, even though they probably had good intentions.

“It’s human nature to want things sooner than later, and to hear what you want to hear,” he explains. If a loan officer is willing to give an individual money for a house he or she can’t afford, the would-be homeowner will justify it somehow, he notes.

But sometimes people know they can’t afford the mortgage and take a risk, just as some consumers will max out their credit cards and simply pay high interest charges.

“A lot of times, it’s just because they don’t have any other access to funds,” says Inman. “But once you get into that hole, it’s very difficult to get out of it.”

To solve the problem, questionable assets must be purchased, put in a trust, and carefully sorted so that good credits are separated from the bad, documented, and sold back to financial institutions at 75 or 80 cents on the

Inman believes the crisis will create more due diligence from financial institutions that previously relied on third parties to accurately evaluate assets. “These things don’t change very quickly,” Inman notes. “I think people will learn from this that you can’t always rely on the past to predict the future. And if you take that one lesson away, I think we’ll be okay.”

As for the government, Sukits’ opinion is the less intervention, the better.

“You’ve got to let the markets find their bottom,” he says, including the housing market. If not, he adds, “all you do is delay the inevitable.”

suggested—should be accompanied by investments in how the work gets done.

“The government’s immediate role is to try to mitigate the effects of the current economic crisis through direct investment,” she says. “I think we live in interesting times, because the federal government will be involved in the economy in a way that it hasn’t been in decades.” Leana is the director of the Katz School’s Center for Health and Care Work, which conducts research on direct care workers and other health care professionals, a segment of the workforce that is worthy of government investment, she says.

These are the jobs that cannot be sent overseas and instead remain in the United States over the long term. And because a large percentage of people working in direct care are low-income workers, they spend more of their paychecks on daily needs, thus infusing money into the economy. Moreover, it is in this sector—people who work with the elderly and disabled, for example— that the nation is nearing a state of crisis. Not enough people enter these jobs, which include difficult, undervalued work, and as the baby boomer population ages, more are needed, Leana says.

Sukits uses examples from the Great Depression in his classes to point out the problems of government intervention; in his opinion, “these sorts of [stimulus] packages rarely work,” because they take too long to produce money that cycles back through the economy.

Job Sector Investments To Carrie Leana, George H. Love Professor of Organizations and Management, there is much government ought to consider in addressing a nation in crisis.

Leana, an expert in high-performance work practices, says investments in areas such as technology and infrastructure—as some have

But Leana is of a mind that government spending can help enormously, depending on how it’s done.

One factor to look at is whether the spending has multiplier effects, meaning a dollar of government investment creates additional dollars elsewhere in the economy. Second, government investment should be spent quickly so that its effects are felt in the short term.

She points to child care, including preschool education, as one prime example.

“I think people will learn from this that you can’t always rely on the past to predict the future. And if you take that one lesson away, I think we’ll be okay.”

“The research evidence here is clear and compelling. With investments in preschool education, you get a big payoff,” Leana says.

“You get an immediate effect in that people who had to pay for child care before will now have that money in their pockets to spend. Child care investment also has a multiplier effect, in that it allows parents to fully participate in the workforce and thus earn more. It also saves money over the long term, as children exposed to quality preschool are more productive citizens when they become adults. So preschool education is just a no-brainer in terms of the stimulus package.”

Policymakers also should be thinking about directing stimulus funds toward areas that will yield long-term benefits, Leana says. Health care coverage for the uninsured is one example, as is investment in the workforce that provides health care and other care services.

Money for grades K–12 and higher education is another good longterm investment, because preparing people for the jobs of the future will ensure a globally competitive workforce, and “right now, we’re losing ground on that,” Leana says.

Public schools and health care systems both suffer from a lack of sound organization, she believes. “A lot of the failure in these sectors is due to bad

—J. Jeffrey Inman

management practices. It’s not that we don’t have great facilities and technologies and people; it’s effective coordination that’s lacking,” she says.

Investment in evidence-based research on how best to organize and coordinate work in these sectors will help to correct that problem, she says. In this way, the country will fuel the intellectual infrastructure that is needed for sustainable growth through 2030 and beyond.

But regardless of where the government winds up spending its money, the worst thing it could do is stay in the same patterns that existed for the past decade, Leana says.

“One thing we do know is if your programs and policies are ineffective, and your response is just to hunker down and keep doing what you’ve been doing in the past, that’s going to produce a negative spiral,” she says.

“Unfortunately, I think we’ve reached that point in many of our core industries and in our economic policies from Washington, and it’s now time for a substantial change of course.” continued

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“I think we live in interesting times, because the federal government will be involved in the economy in a way that it hasn’t been in decades.”

—Carrie Leana

Identifying Investment Opportunities Inman, who also serves as the associate dean for faculty and research, thinks future crises could be averted—or at least ameliorated— by improving the public’s financial literacy.

“We need to do a better job in educating individual investors [about] how to manage their retirement funds, because, increasingly, it’s drilled down to the individual to set aside enough money while they’re working to carry them through their retirement years,” he says.

Inman helped to develop a financial literacy quiz for the Katz School’s Web site (www.katz.pitt.edu/investingiq) and says people can easily get the basics of rational investing through the sites of such popular companies as the Vanguard Group, Inc. and Fidelity Brokerage Services LLC. Although those resources are free and readily available, the problem is that few people place a priority on their own financial education, he says.

“What it really comes down to is that people just don’t have time to do it—yet it’s so critical,” Inman notes.

Current research shows that women are more likely to make substandard investment decisions than men, and the reasons for that are worthy of further investigation.

While many good investment opportunities exist in the market, Inman believes that “a lot of people are very gun-shy, because they don’t have any sense that we’ve reached bottom.”

Around the School

His advice: Think about the long haul, not simply the current crisis. While he would personally avoid financial services and the automotive industry in the existing climate, he does note that some retailers are attractively priced.

Inman coauthored research that was highlighted in U.S. News & World Report that found inexperienced investors who faced too many choices in their 401(k) plans wound up taking on more risk than they would have if they had had fewer options.

Inman recommends that people sit down, either alone or with a financial advisor, and develop an asset allocation strategy before looking at any of the available choices.

Like Sukits, Inman does not favor additional regulation, which he believes will risk future success. In fact, changes to the infrastructure of certain industries—with automakers being a prime example—will be a necessary part of righting the economy, he says.

The auto industry has been poorly managed and saddled with labor that has entitlement-rich contracts, says Inman. Both of those would have to change for a bailout to succeed.

“Changes are painful, but longer term, that’s what makes your economy a success,” he says. “The key is bolstering consumer confidence. The sooner we get that back, the sooner the economy will be heading in the right direction,” Inman says. “Right now, we’re in a downward spiral. Eventually it will bottom out, and the course will be corrected. But boy, I hope it happens sooner rather than later.”

continued

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New faculty, left to right: Patricia Hughes, clinical assistant professor of business administration, accounting; Cait Poynor, assistant professor of business administration, marketing; and Michael J. Donohoe, clinical assistant professor of business administration, management science and operations

Paul O’Neill

Frank Gaoning Ning

Left to right: University of Pittsburgh Chancellor and Bank of New York Mellon Corporation Board Member Mark A. Nordenberg; Associate Professor of Business Administration Ravi Madhavan; Joseph M. Katz Graduate School of Business and College of Business Administration Dean John T. Delaney; Mike Bryson, former chief financial officer of Mellon Financial Corporation; Jan Bamford, first vice president for global client management, Bank of New York Mellon; and William T. Valenta, Jr., assistant dean of MBA Programs at the Katz School

Homecoming 2009 Save the Date! October 22–24 Pitt Business reunion

continued

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Pitt Business Spring 2009

Carrie Leana

The Katz Executive MBA ranks among the top 10 in the world for cross-continent EMBA programs.

Based on Financial Times 2008 EMBA ranking

An executive shares with students his experiences dealing with the role of politics and government relations in Nigeria at the ďŹ rst-ever Case in Action, sponsored by the David Berg Center for Ethics and Leadership and the Johnson Institute for Responsible Leadership.

continued

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Student News

“Up and over heads”: Members of the Katz rowing team hoist their shell above their heads in preparation to launch for the 22nd Head of the Ohio Regatta. The team placed fifth.

How do you build a learning community?

Audrey Murrell

Katz Full-time MBA Program Ranked 25th in the United States

With glue, ink, foam, and an openness to creative thinking

In the art studio of the Children’s Museum of Pittsburgh, Katz students use pictures and symbols to create a flag representing their multicultural learning team as part of the full-time MBA transition module.

The Katz full-time MBA program ranked 25th in the United States and ninth among U.S. public universities in the 2009 Financial Times Global MBA Rankings. The full-time MBA program also ranked first in the United States in the “Value for Money” category.

continued

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Members of the Ericsson team, which took first place in the December McKinsey Cup competition, listen to feedback from the judges after making their presentation in the final round.

Conor Lee celebrates a Panthers win.

Jacqueline Pike

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New Program

Phi Beta Lambda delegates (left to right) Steve Lerch, Ryan Varley, Peter Cline, and Justin Rosenkaimer

Earn a Master of Science in Accounting at Katz s Full time, one year s Flexible curriculum to accommodate students with different educational backgrounds s Apply course work toward the 150 credit hours desired by most CPA firms For more information, including a list of prerequisites, visit www.business.pitt.edu/katz/macc.

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Alumni News and Events

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The 2008 Distinguished Alumni Award winners (left to right): Frank Domeisen (MBA ’82), Thomas Christopher (MBA ’80), Cynthia Zydel (MBA ’91), and Rohit Deshpandé (PhD ’79) and H.J. Zoffer Medal for Meritorious Service honoree Kristen Holloway Querriera (MBA ’05) (center) at the Duquesne Club, May 8, 2008 Pitt Business Board of Visitors members (left to right) Howard W. “Hoddy” Hanna III, Terrence P. Laughlin (MBA ’81), Robert W. Smith III (MBA ’73), Charles M. “Chuck” Steiner (BBA ’63), Max H. Mitchell (MBA ’89), George A. Davidson Jr., and Bobbie Gaunt with Dean John T. Delaney (center) and Pitt Provost and Senior Vice Chancellor James V. Maher (third from right) at the ribbon cutting ceremony for the new $2.3 million Financial Analysis Laboratory, October 3, 2008

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MBA students Alexandra Kelley (top right) and Ashwini Kumar (bottom right) demonstrate to Pitt Business Board of Visitors members Laughlin (top left) and Smith (bottom left) how they use real-time data and software packages—the same technology used by traders and analysts—in the new Financial Analysis Laboratory during a simulation conducted by Kuldeep Shastri, Roger S. Ahlbrandt Sr. Endowed Chair in Finance and professor of business administration.

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Members of the Pitt Business Alumni Board Executive Committee (left to right) Jeff Marzina (MBA ’87), James A. Yard (MBA ’69), Jan L. Bamford (MBA ’94), and Bill Friday (MBA ’97) with Dean John T. Delaney (center) at the Financial Analysis Lab dedication These couples have more than a Katz MBA in common. (Left) Daniel Bucchi (MBA ’08) and Martha Suryani (MBA ’08) were married August 29, 2008. (Right) Alice Liang (MBA ’08) wed Ting Yen (MBA ’05) on July 26, 2008; the bridal party included Cindy Kuo (MBA ’08), financial manager for the Katz School and CBA.

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So elated was he by Bill Mazeroski’s hitting the game-winning home run in the bottom of the ninth inning of the final game of the 1960 World Series that the father of Katz alumnus Nick DeMao (MBA ’67) took first base from the Forbes Field infield as a souvenir. The younger DeMao brought the “bag” and his memories to this year’s anniversary celebration of the 1960 World Series held outside Mervis Hall, where a portion of the Forbes Field wall still stands, and organized by the Katz Participation Team.

Jim Waite, the new director of alumni and constituent relations for Katz and CBA, at a December 2008 alumni event at Heinz Field that included a tour of the Pittsburgh Steelers’ locker room James B. Tafel Endowed Internship Fund recipients Melinda Gorentz (top), a junior in CBA studying marketing, and Michael Kaplan (second from top), a CBA junior pursuing an accounting and finance double major, shared their internship d eexperiences with BBA and Katz alumni aat the October 2008 51+ Luncheon. Other CBA students—including Christina C Whittaker (bottom right), a CBA junior W majoring in finance who also is pursuing a m minor in economics, a Certificate in Public m aand Professional Writing, and a Certificate iin International Business focusing on the Spanish language—attended the luncheon S aand learned what it was like to be a Pitt undergrad 50+ years ago from dedicated u professionals like David Rellis (BBA ’56). p

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Pitt Business is On the Move

Financial Analysis Laboratory Naming and Gift Opportunities

We’ve been busy … s

Join us at an upcoming Pitt Business On the Move event near you!

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Hail to Pitt!

Pitt Business Alumni Board of Directors Join the Pitt Business Online Community

Making Pitt Business Better Business

Steve R. Arnowitz (MBA ’93) Hollie Baker Jr. (MBA ’02) Jan L. Bamford* (MBA ’94) Oda Bolden Jr. (MBA ’98) Stephen A. Botos Jr. (MBA ’86) David M. Duffus (MBA ’92) William Friday* (MBA ’97) James Gaslevic (MBA ’03) Aaron J. Hayes (MBA ’06) John L. Hayes (MBA ’97) Samantha Kilgour (MBA ’04) William F. Klug V (MBA ’94) Christine M. Kretz (MBA ’93) Marlene K. Leech (MBA ’02) Angela B. Maher (MBA ’83)

William Marencel Jr. (MBA ’95) Jeffry Marzina* (MBA ’87) Kazunobu “Kazu” Nakao (MBA ’94) Lisa M. Polar (MBA ’98) Christopher J. Porter (MBA ’94) Daniel F. Stokes (MBA ’72) Kim T. Taylor (MBA/ MPIA ’96) Jeffrey M. Tompkins (MBA ’92) Alejandro “Alex” C. Urrea (MBA ’02) James A. Yard* (MBA ’69)

For a list of emeritus board members, visit www.business.pitt.edu/alumni/board-of-directors.html. *Pitt Business Alumni Board Executive Committee member

NONPROFIT ORG. U.S. POSTAGE PAID PITTSBURGH, PA PERMIT NO. 511

Joseph M. Katz Graduate School of Business and College of Business Administration Office of the Dean 372 Mervis Hall Roberto Clemente Drive Pittsburgh, PA 15260

To receive a t, use $50 discoun code promotional PBCAMPT.

Hosts...

Center for Executive Education

Join us for the Disney Keys to Excellence program DATE: June 3, 2009

LOCATION: Connolly Ballroom-Alumni Hall

REGISTRATION AND INFORMATION: Phone: 877.544.2384 Online: www.KeysPittsburgh.com Email: registrations@KeysUS.com Event organized by Solution Infusion

Disney Keys to Excellence One Day Program Topics: LEADERSHIP Discover how effective leadership has driven Disney’s employee/customer satisfaction and bottom-line results, from the company’s inception to today.

MANAGEMENT Understand the importance of integrating your corporate culture into selection, training, and care of your employees.

CUSTOMER SERVICE Explore world-renowned Disney principles for service excellence.

LOYALTY Learn key practices and principles in building and sustaining loyalty that have made Disney a trusted and revered brand around the world for more than 75 years.