@Mays - Spring 2011

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Contents

Mays Business School, Texas A&M University

12–25 | Entrepreneurship

National Recognition

1 | Mays programs reach new heights in the rankings

Good times or bad, entrepreneurs and small business contribute substantially to the U.S. economy.

This issue of @Mays highlights current and former students who’ve started something.

2 | Three Mays students land national scholarships

Damani Felder ’14 Jackie Robinson Foundation Scholarship Terrence Weaver ’11 Pat Tillman Foundation Scholarship Omar El-Halwagi ’11 Harry S. Truman Scholarship

12 | Opportunity knocks Chris Nicolaysen and Ohad Nezer, both MBA Class of 2009, learn through experience the importance of focusing on core business.

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Mays Summer Learning Seminar 2011 Business in a Turbulent Economy

26 | Marketing and ministry

Marketing graduate Greg Matte ’92 follows his heart 27 | Aggie 100 2010

The annual event celebrates Aggies of every stripe

The generosity of donors supports Mays Business School students, programs and faculty 30 | Business of blessing 31 | Honor through honors

22 | File your taxes, then go shopping Coming to a mall near you? Kyle Klansek ’13 wins $10K for tax filing kiosk idea.

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23 | BCS Fashion Week International Fashion Week 2011 came to BCS thanks to Paige Melvin ’09.

7 | Living Large

24 | Empowering Entrepreneurs Travelling to South Africa to share what they know, Lauren Dunagan ’11, Paul Morin ’10, Rishabh Mathur ’10, and Kelly Kravitz ’13 help underresourced small business owners.

Editorial Assistant Elyssa Jechow, Kelli Levey

Former student news

Donor Spotlight

20 | For the children A study abroad project turns into much more for Robert Furr ’04 and Jose Mahomar ’04.

@Mays Editor Chrystal Houston

10 | Marketing 3.0

This past fall, Mays honored former students John Van Alstyne ’66, Bob Loeffler ’77, Bruce Broussard ’84; and doctoral former students Sundar Bharadwaj and Sandy Wayne.

19 | A bite of business Still in college Erin Eisenrich ’11 launches a print magazine devoted to BCS local eateries.

Associate Director for Marketing and Alumni Relations Kristin Cooper

PepsiCo CEO and Chairman Indra Nooyi

28 | Outstanding Alumni

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18 | Just say ‘iiwii” Larry Warnock ’83 urges everyone to avoid “death by duck bite.”

Director of Communications and Public Relations Pam Wiley

8 | Duty of Care

Marketing thought leader Philip Kotler

15 | Engineers to entrepreneurs Aggie engineering students add business knowledge in a 3-week summer course.

16 | Philanthropreneurship Corporate+nonprofits in a new model of creating sustainable wealth. Andy Ellwood ’04 of Gowalla pursues a vision.

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SAVE THE DATE JUNE 11, 2011

14 | Be your own boss?

Important considerations before you strike out on your own.

Mays Business School Jerry Strawser, Dean

Spring 2011

32 | A parent’s pride Faculty research

33 | Increase incentives, decrease corporate pollution

At a surprise 90th birthday party for Professor Emeritus of Marketing Herb Thompson, former students, friends and family gather

Design Linda Orsi, HSC Marketing and Communications Illustration Tamara Strecker Photography Gabe Chmielewski Michael Kellett Igor Kragular Jim Lyle Nicholas Roznovsky Texas A&M Media Relations

34 | You say illegal, I say legitimate 35 | In the name of the company 36 | Don’t skip on marketing or R&D to stay on top

@Mays is a semi-annual publication for the former students and friends of Mays Business School at Texas A&M University.

This publication is made possible by the generosity of private donors.

Monthly news updates are available in Mays’ online magazine, Mays Business Online, at maysbusiness.tamu.edu.

Information about the majors, degrees and programs offered by Mays Business School is available at maysbschool.tamu.edu.

Update your mailing information at aggienetwork.com For our business graduates, we use the information The Association of Former Students provides. To update your mailing information, go to aggienetwork.com, choose the "Login" button found in the top maroon band and follow the instructions. © 2011 Mays Business School

Mays Business School • Texas A&M University • 4113 TAMU • College Station, Texas 77843-4113

National Recognition

Full-Time MBA program highly ranked by Bloomberg Businessweek In a recent ranking from Bloomberg Businessweek, the Full-Time MBA program at Mays is listed as 11th among public programs in the nation and 30th among all U.S. schools.

The Mays program boasts one of the highest employment rates after three months — 92 percent — and is one of the most affordable programs in the top 50 rankings. The program also ranked 13th overall (4th public) in the poll of corporate recruiters who were asked to rank programs based on the quality of the graduates.

This ranking of full-time MBA programs is based on three elements: a survey of newly minted MBAs, a poll of corporate recruiters, and an evaluation of faculty research output.

Texas A&M Executive MBA highly ranked by Financial Times Mays is recognized as having one of the top executive MBA programs in the world by the Financial Times.

The 2010 rankings place the executive MBA program 11th in the nation among public U.S. programs (29th among all U.S. schools, public and private), and 62nd globally.

The program was also ranked 2nd in the category of work experience among U.S. public schools (6th overall), globally 17th. The most recently admitted class of executive MBA students at Mays averages 17 years of work experience.

The Financial Times considers faculty research quality and quantity metrics in its rankings. Mays ranked 31st globally in research productivity, based on appearances of Mays faculty members in 45 leading journals across all disciplines.

Counting higher The Mays accounting programs quality and productivity of faculty research continues their upward trajectory.

Authors of a Brigham Young University paper analyzing research quality and productivity ranked the department 6th in the country when all topics and all methods were considered.

Spanning the last 12 years, the program is ranked 4th and for the last 20 years, 6th using the same metric. This is an improvement over the department’s already notable 2009 ranks of 12th, 8th and 8th in the country for its “all topics – all methods” overall ranking using the last six years, 12 years and 20 years of publications.

Accounting also fared well in Public Accounting Report’s recent “Annual Survey of Accounting Professors,” which ranks accounting programs based on feedback from more than 1,700 accounting professors nationwide. In the 2010 ranking, Mays’ accounting master’s program ranking increased to #7 from #9 overall and the undergraduate program ranking improved to 8th from 15th.

Mays finance program nationally ranked #5 by recruiters In a recent study published in the Wall Street Journal, prospective employers rated U.S. colleges and universities, as well as select majors, on the basis of whose graduates were best prepared and most able to succeed. The finance program at Mays was recognized as 5th in the nation.

The WSJ surveyed 479 large U.S. companies, nonprofits and governmental agencies to arrive at the rankings, which listed Texas A&M second among all schools. The study revealed that top public institutions were generally favored over Ivy League and other private institutions.

SPOTLIGHT

Mays stands alone in CFA Institute partnership The CFA Institute has named Mays as a program partner with its BBA, MS-Finance and MBA curriculums, the only CFA Program Partner in the U.S. with three approved programs. Each of these degree programs cover at least 70 percent of the CFA Program candidate body of knowledge including CFA Institute’s ethical and professional standards.

Finance Professor Arvind Mahajan, who was instrumental in establishing the partnership and will direct it as it develops, said it will benefit A&M students in both training and scholarship opportunities. “Through this partnership, more Aggies will obtain the coveted CFA certification,” said Mahajan,who also directs the Aggies on Wall Street Program.

Recognition as a CFA Program Partner signals to potential students, employers, and the marketplace that the university curriculum is closely tied to professional practice and is wellsuited to preparing students to sit for the three levels of CFA examinations.

Still jamming the halls, Career Fair brings together students and recruiters in an informal atmosphere. The event is held both spring and fall semesters and is still studentled from beginning to end.

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National Recognition

“In some ways being home schooled is a hindrance but in some ways it’s a blessing.”

Almost as impressive, he is the first homeschool graduate in A&M’s history to earn a walk-on position on the Aggie football team.

If that isn’t enough notoriety for one Aggie, Felder, who intends to major in management, aspires to be student body president. And he plans to be CEO of a major corporation by the age of 35.

Some might scoff at Felder’s untested, freshman ambition.

“It was a national Damani Felder ’14 was the first home-school graduate to scholarship, so I receive a $24,000 Jackie Robinson Foundation Scholarship. thought, ‘What are my He also is A&M’s first home-school graduate to earn a walk-on chances of getting it?’” position on the football team. says Felder, recalling his application for the Robinson scholarship. His chances were about 1in 100: of the 4,000 applicants nationally each year, about 40 students are selected. His application included five essays about his goals, aspirations, and a letter of recommendation. A few months later, his odds improved when he was one of 200 semifinalists selected for an interview.

Felder traveled from his home in Bryan, Texas, to Houston where he was interviewed by a panel of six business and civic leaders. n athlete and a business student, Public speaking training he received through Damani Felder ’14 knows that 4-H (he was a state champion in 2010) and an understanding of statistics and laws Youth Toastmasters paid off in the interview. of probability is vital to his success.

Robinson Foundation scholars are selected Even better than understanding the odds, on academic ability, leadership potential and Felder is making a habit of defying them. financial need. Weeks later, Felder found In fall 2010, Felder became the first out he was one of two students from the home-school graduate to receive a Jackie state of Texas to be chosen for the program.

Robinson Foundation Scholarship — an It’s not surprising that Felder stands award of $24,000 which, paired with out in a crowd. As one of nine children, his other scholarships, will completely he’s had years of practice at doing what it cover his education at A&M. takes to be noticed. Felder’s father made

A bright future

Mays student earns Jackie Robinson Foundation scholarship, walk-on position with the Aggies

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a career of the Air Force. Moves were routine. Felder says home schooling made sense for his family — it was simpler than making so many children uproot their scholastics every few years. “In some ways being home schooled is a hindrance,” he says, noting the lack of serious football opportunities, “but in some ways it’s a blessing.” The more individualized education Felder received at home was clearly a boon, as his strong SAT score attests.

The Robinson Foundation scholarship will enable Felder to do more than simply graduate debt-free. It comes with big opportunities: an annual trip to New York City, where he’ll network with famous and influential people such as Bill Cosby and Hillary Clinton; training in business etiquette, life skills and leadership; peer and professional mentoring; international travel; and guaranteed internships with sponsor companies, such as Goldman Sachs, that frequently lead to job opportunities after graduation. Robinson scholars maintain a 97 percent graduation rate — more than twice the national average for minority students.

There are other perks such as a $10,000 incentive award for the scholar with the highest GPR at the end of the first year.

The opportunities Felder has through Mays and the Robinson Foundation will mean a bright future, no matter how he fares on the football field.

“All I’ve got to do is get out there and make the grade," he says with equal parts confidence and determination.

Why a business major? Partially, he’s following in his brother’s footsteps — Eddie Lee Felder III ’10 will graduate this year with a degree in marketing.

Beyond that, the economy is in trouble, he says. He’d like to be able to help find solutions that will turn the tide.

With his entire career ahead of him, filled with glittering potential, odds are he will do just that.

National Recognition

Soldier • Scholar • Sales

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n his mid-twenties, Terrence Weaver ’11 had served five years as a medic in the Navy, with tours of duty in Iraq and Kuwait.

He had a lucrative career in sales after leaving the military. He had a family. But he wanted something more: a college degree.

Even with the benefits of the GI bill, leaving a job and paying for college expenses is hard to swallow when you have a family to support. That’s the lesson Weaver was overjoyed when he was notified that he would be a recipient of a Pat Tillman Foundation scholarship.

More than financial benefits, Weaver is glad to be a part the Tillman Foundation, as he was impressed when he heard Pat Tillman’s story. In the aftermath of the 9-11 attacks, Tillman put his NFL career with the Arizona Cardinals on hold to serve his country. He joined the Army, became a Ranger and completed several tours of combat duty before he was killed by friendly fire in Afghanistan in 2004.

“Let us never forget the selfless acts and sacrifice of Pat Tillman and America’s military members alike,” said Weaver.

Since 2009, the Tillman Foundation has invested in veterans and their families through education, community and advocacy. It offers aid to all veterans and specifically the ever-growing population of veterans and dependents of the Iraq and Afghanistan conflicts.

The Tillman Military Scholars program provides educational scholarship support and resources to veterans, active service members and their dependents. From a pool of more than 1,500 applicants, 60 recipients were chosen this year, including Weaver and five others at A&M. Weaver, who is from San Bernadino, Calif., says he chose to pursue a degree at Mays “because of the great program that it offers and the overall reputation for military support and patriotism.”

One differentiating characteristic of the Tillman scholarship is that it is for tuition and books; and it covers direct costs related to education expenses such as housing and childcare. With three children ranging in ages from 1 to 10, this is particularly helpful.

The foundation requires Tillman Scholars pay it forward through involvement

Truman Scholar aspires to legal career

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Military veteran Terrance Weaver ’11 is looking toward a bright future in sales after graduation from Mays and eventually starting a nonprofit.

in philanthropic activities. Weaver performs community service with his church, and says his real passion is to start a nonprofit business that provides food for needy people worldwide. He is working on a business plan for this venture.

Gregarious, confident, and energetic, Weaver has a natural aptitude for sales and a zeal for entrepreneurship. In fact, he started his first business at 11 years old, washing cars in his southern California neighborhood. As he completes his final year in the marketing at Mays, he is looking ahead to re-entering the workforce. He hopes for a sales position that utilizes his talents and involves marketing a product he is passionate about and believes in. He was highly successful in sales prior to starting college, despite a lack of genuine enthusiasm about the company or product. When he finds the right marketing opportunity, he expects to create that success again, and use his earnings to fund his nonprofit dreams.

“I like selling … I like the freedom of it,” he says. “It’s always new. There are no strict guidelines …. It’s super creative. I like bringing a new idea to life. I like creating something out of just an idea. That’s pretty amazing.” That’s something he might have shared with the namesake of his scholarship: Tillman also earned a degree in marketing prior to his NFL years.

mar El-Halwagi ’11 hopes to parlay his Harry S. Truman Scholarship into a law degree so he can specialize in employment discrimination or civil rights.

The Truman Foundation funds the $30,000 scholarships for students pursuing careers in public service. El-Halwagi is the first Texas A&M student to receive the honor since 1994.

Truman Scholars are selected on the basis of leadership potential, intellectual ability and likelihood of “making a difference.” El-Halwagi is one of 60 scholars selected from among 602 candidates nominated by 264 colleges and universities.

El-Halwagi, a graduate of A&M Consolidated High School in College Station, is a management and business honors major with a minor in communications. He is the president of the Texas A&M Speech and Debate Team and was the 2009 Pi Kappa Delta national champion in extemporaneous speaking.

El-Halwagi received All-American awards at two national speech and debate competitions. “All the speeches and debates I give are based on things I really care about,” he says. “I see it as a way to learn more about certain topics and to teach others about them.”

He has been the administrative coordinator the Freshman Business Initiative and has proposed and led his own special topics course for Mays. He participated in the 2009 China-U.S. Relations Conference, and has interned with the Federal Emergency Management Agency through the Public Policy Internship Program.

El-Halwagi co-founded Global Law Brigades at A&M, and plans to take a group of students to Panama to work with a non-governmental agency. He also coaches middle school students in speech and debate and has volunteered in Teen Court.

He plans to take his Law School Admission Test in June, then he hopes

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National Recognition

Omar El-Halwagi is the first Texas A&M student selected as a Truman Scholar in more than 15 years.

Mays student places 2nd in national WSJ competition

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to pursue a joint degree in law and social policy at the University of Pennsylvania Law School. In the long term, he hopes to build a career as an employment discrimination lawyer and, later, a public official.

“I’ve always known I wanted to be a lawyer,” he said. “I have always been in speech and debate and theater, and I was class president so I have that leadership experience.”

He attributes his habit of “fighting for what I believe in and speaking up,” from his family members, who are all engineers.

El-Halwagi is particularly interested in the civil rights infringements against Muslim Americans. “I get really worked up about civil rights issues, particularly against Muslim Americans,” he says. “My personal experiences have made me pursue this issue, especially post-911.”

In addition to the scholarship funds, the scholars receive priority admission and supplemental financial aid at some premier graduate institutions, leadership training, career and graduate school counseling, and special internship opportunities within the federal government. Recipients must be U.S. citizens, have outstanding leadership

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potential and communication skills, be in the top quarter of their class and be committed to careers in government or the not-for-profit sector.

El-Halwagi is the first Texas A&M student selected as a Truman Scholar in more than 15 years. The most recent Texas A&M student to be selected as a Truman Scholar was Kellie (Sims) Butler, in 1994. In the last 10 years, nine Aggies have progressed to finalist, the most recent being international studies major Karthik Venkatraj ’10.

Established by Congress in 1975, the Harry S. Truman Scholarship Foundation is the official federal memorial to the nation’s 33rd president. Truman Scholars are recognized as “change agents” and have the “passion, intellect, and leadership potential that in time should enable them to improve the ways that public entities…serve the public good.” Notable Truman scholars include Secretary of Homeland Security Janet Napolitano, broadcaster and political advisor George Stephanopoulos, U.S. Ambassador to the U.N. Susan E. Rice and Ford Foundation President Luis Ubiñas.

or Josh Burkett ’10, a finance major from Mansfield, Texas, meticulous note-taking paid off outside the classroom: he recently placed second in the solo competition of the sixth annual Nationwide/Fisher Biz Quiz Competition.

Hosted by the Ohio State University’s Fisher College of Business and Nationwide, the Biz Quiz tested participants’ knowledge of material in six weeks’ worth of The Wall Street Journal. Fifty-four students from 18 prestigious colleges and universities from across the nation participated in the event, which had separate rounds for teams and individuals.

Burkett says that by the time the six-week period was over, he had amassed 77 pages of notes from studying the Journal four to five hours a day. He had his notes bound and then used them to review with teammates Benjamin Burns ’12 and Ryan Smith ’12, both accounting majors, on the trip to Ohio.

The teams, composed of three undergraduate students, compete in three rounds. Nine teams advance to the semifinals, and only three make it to the finals.

The Mays team’s effort was rewarded as they made it to the semifinal round to finish in fifth place behind Ohio State, Michigan State, Michigan, and Emory. They came out ahead of teams from North Carolina, SMU, Notre Dame, Northwestern, and Wisconsin, among others.

Risa Meyer, an academic advisor at Mays, was the team advisor for the event. She quizzed the team members on WSJ content each week and traveled with them to Ohio for the competition. She was pleased with the outcome.

“Throughout the weekend, they were serious about the competition but also had fun,” she said. “Numerous students and advisors came up to all of us saying how they were cheering for A&M and how much fun they were to watch. It was a breath of fresh air compared to some of the students that took themselves very seriously, and a testament to our students as strong competitors with great people skills.”

National Recognition

2011 National Champions

Skylar Collins ‘12

The NCAA 2011 Woman’s Basketball National Championship Team includes two business students; Skylar Collins ‘12 a marketing major; Kelsey Assarian ‘12 a supply chain management major.

Kelsey Assarian ‘12

Burkett says the competition was “really fun, and something that I’d always wanted to do. It was a chance to shine and represent Mays.”

After graduation, Burkett will return to his previous summer employer, Barclays Capital in New York, for a full-time analyst position. The competition made him appreciate all that the WSJ has to offer, he says. “In the past I might just read the front page or Marketplace to see what deals were going on. I have a new respect for all of the different sections of the journal.”

After winning 2nd place in the solo competition, Josh Burkett ’10 (2nd from left) is all smiles with his Biz Quiz teammates Benjamin Burns ’12 and Ryan Smith ’12.

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National Recognition

Paradigm shift in management theory

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monograph paper indicates a game-changing shift in management theory. The Journal of Applied Psychology has designated the research conducted

by Mays professor Bradley Kirkman and his co-authors as a monograph paper. The comprehensive nature of the new research allows organizations to plug in different variables and determine which approach will work best in a given culture or multicultural organization.

The article “Examining the Impact of Culture’s Consequences: A Three-Decade, Multilevel, Meta-Analytic Review of Hofstede’s Cultural Value Dimensions” appeared in Journal of Applied Psychology in May 2010.

Culture accurately predicts loyalty, longevity, and performance in the workplace

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n employee’s cultural background is sometimes a more accurate, consistent predictor of his or her job performance and organizational loyalty than personality tests routinely used by employers. So says a new study—the largest of its kind—that examines how cultural values affect job performance.

Kirkman, and co-authors, pulled together data from nearly 600 previous studies that analyzed the effects of cultural values on job outcomes linked to 200,000 individuals. The research examined 80 areas of organizational life such as non-verbal communication, perceptions of justice, and employee rewards and how they’re affected by cultural values.

Cultural diversity poses particular challenges to a company, but the challenges can be minimized and the monetary rewards for corporations maximized when they balance these values correctly, say researchers.

The findings have huge implications for corporations with high multicultural diversity.

Perceptions of justice and rewards are among the most important, the authors say. In cultures that value personal achievement (the U.S., for example), rewards for individuals can motivate a team to work harder and compete for rewards. However, that approach can clash with cultural values such as respect for seniority and egalitarianism.

For more on this research visit, mays.bz/kirkman1 Contact Kirkman at brad.kirkman@tamu.edu.

Academy of Management recognizes the contributions of Mays Faculty

SPOTLIGHT

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he Academy of Management awards a distinction for its members titled “Fellow”; a distinction earned by less than 1.5 percent of the nearly 20,000 members of the academy worldwide. The prestigious fellows group, which meets annually, was established to honor members of the Academy of Management who have made significant contributions to the science and practice of management. Fellows serve as ambassadors for the academy.

Mays Business School has six fellows in its Department of Management.

• Murray Barrick • Ricky Griffin • Luis Gomez-Mejia

• Don Hellriegel • Michael Hitt • Duane Ireland

This places Mays behind only Harvard University, University of Michigan, Stanford University, and University of Washington in terms of the number of Fellows.

More than 300 people attended the Mays Scholarship Banquet in fall 2010.

This annual gathering of business student scholarship recipients and donors grows every year in size and enjoyment.

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Living large

Professor Thompson teaching class in this undated photo.

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is students knew him for his straightforward, nononsense approach in teaching marketing during his 35 years at Texas A&M. His colleagues for his zeal for living.

At a recent surprise 90th birthday party concocted by Brandon Coleman ’78, Professor Emeritus Herb Thompson proved he was still straightforward in his speech and still living large.

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Sharing in the celebration, Professor Thompson is shown with (1) City of College Station Mayor Nancy Berry bearing a proclamation of Herb Richardson Day; (2) Mays lecturer Robin Starnes; (3) marketing professor Larry Gresham; (4) marketing department head Rajan Varadarajan; and (5) Red Cashion, Porter Garner, and Brandon Coleman 2

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Duty of care PepsiCo CEO and chairman on sustainability

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s a child in India in the 1950s, Indra Nooyi saw firsthand how corporations could harm a community, robbing it of resources and leaving ruin in its wake. It doesn’t have to be this way, she thought.

Fast-forward 50 years. Nooyi is now the chairman and CEO of PepsiCo, the global food and beverage company. She is also the chief architect of PepsiCo’s multi-year growth strategy, Performance with Purpose, which focuses on delivering sustainable growth by investing in a healthier future for people and the planet.

Corporations owe “a duty of care” to every community where they have a presence, she says.

“Many companies have forgotten that,” Noovi says. “They focus on the financial performance and have forgotten the fact that they owe every society that they operate in a duty of care … I felt PepsiCo could, as a company, do better by doing better for every society.”

Sounds great, but what does that actually look like? Is this another corporate social responsibility initiative that will be here today and gone with the whim of tomorrow’s CEO? No, says Nooyi. “Being better by doing better” is the heart of PepsiCo’s culture. It encompasses every area of their organization, from procurement to HR, touching every constituent of the business: communities, individual customers and employees.

Best of all, it’s profitable for PepsiCo and their constituents. It’s not a charitable endeavor, like many other companies' attempts to spread wealth.

Instead, it builds wealth in a sustainable cycle.

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Take for example PepsiCo’s recent efforts in Peru, which will create an industry for subsistence farmers in the high Andes, growing specialty native-variety potatoes.

These crops will be purchased by PepsiCo and turned into products tailored specifically to the tastes of the Peruvian customers (Lay’s Andinas and Lay’s Peruanisimas). A traditional corporate social responsibility program might see that these farmers are without adequate clothing during the harsh weather extremes and give them coats and blankets.

Nooyi says PepsiCo’s initiative is far superior by providing farmers with the means to buy what they need for themselves, making them independent, as well as useful to PepsiCo. “What we wanted to do was to give those people in the high Andes a sustainable way of making a living,” she says.

“That’s how we build a whole sustainable cycle … That’s how we do business in every country where we operate.”

Obesity: a weighty topic The idea of sustainability also touches on PepsiCo’s response to the childhood obesity epidemic, which is not only an American problem, but one many developed and developing nations face, including Nooyi’s native India. “This is something that keeps me up at night,” she says, noting the systemic

problems that come with obesity, including rising health care costs for individuals and corporations, and decreasing life expectancy rates.

Some would blame her company for making children unhealthy, but there are many factors that lead to childhood obesity, she says. It’s lifestyle, diet, stress, genetics, access to nutrition and a safe place to exercise and play. Focusing on one element of the complex equation, such as sugared beverages, does not address the entire problem, she warns — it only creates frustration and confusion.

Urban planners must join the discussion, so that adequate sidewalks and playgrounds are provided for communities. Physical education must be mandated in schools.

Legislation must be reformed so there are fewer government subsidies for corn production and corn syrup, and more for nutritious foods.

“If we as a country want to address obesity, we have to do it on multiple dimensions,” she explains. “We have to educate young people and families on how to eat right. You cannot take away personal responsibility at the end of the day. I cannot tax you or mandate what you eat; I have to educate you and let you make the right choice.”

Nooyi suggests greater emphasis on childhood nutrition, including school lunches. Also, labeling of all foods (at the grocery store and at restaurants) needs to be clearer, so that consumers can make better nutritional choices. PepsiCo has already adopted better labeling.

“Obesity is a multifaceted problem, but food companies like ours can’t sit back and say ‘because it’s a multifaceted problem, we’re not going to do anything about it,’” she says. “We’re going to do our part. If every company in every industry started to do its part, we could make some change.”

It’s a challenge, but it’s also an opportunity, says Nooyi. In addition to better labeling, PepsiCo is improving its product line. “We are committed to reducing calories, sugar levels, saturated fat levels,

In Wehner

sodium levels, in all our products.” Transfats were removed from PepsiCo products four years ago.

Nooyi says that they are also aggressively shifting the portfolio away from “fun for you” items (chips and sugared soft drinks) to “better for you products” (popcorn, baked chips and zero-calorie drinks), to “good for you products” (granola bars and fruit juices).

They’ve recently acquired Quaker Oats and Tropicana to that end. They are developing new products, such as drinkable oats, that are delicious, healthful, convenient and hopefully will have the same “cool” factor for young people as a can of regular Pepsi.

“We are going to sneak goodness into you in an authentic way,” she says, noting that the drinkable oats are so tasty that people won’t realize they are wholesome. “We have to break this compromise between taste and what is good for you.”

Focus on the whole self, not the skill set Part of Performance with Purpose is creating a great workplace for employees. Nooyi discussed the challenges of developing talent within the organization so that growth can be organic. Now that so many families have two-career couples or young people caring for aging parents, many employees are less willing to move for a job, though it would lead to their promotion — perhaps to the c-suite.

PepsiCo approaches this dilemma through “future back planning.” They examine their talent pool, looking for the leaders of the pack, who in 20 years could be the leaders of the company. Then, they interview each of these hundreds of highpotential employees for several hours, asking them about their goals and ambitions within the organization, as well as their limitations (such as unwillingness to relocate) and expectations. “We’re trying to understand this person more holistically, so that we can actually develop …a career development program for them, which takes into account all of these aspects of a person.”

The goal is do what is best for the company and the individual. “If you think

Chairman and CEO Indra Nooyi crafted PepsiCo’s multi-year growth strategy, Performance with Purpose, motivated by her childhood desire for companies to do better by being better.

“We want to provide an environment where each person comes to the door bringing their whole self to work. The only way we can do that is if we respect the whole self.” of employees as bodies and faces rather than emotions and what they bring with them," then you’re missing a lot of potential,” says Nooyi.

“It’s a very, very complex job, and I’m not sure we have all the answers,” she says, noting that no company is doing a great job on this front yet. “When you do just-in-time

career rotations, it’s too late.” You’ve likely missed the opportunity to fully develop that employee, a loss for the company and the individual.

“We want to provide an environment where each person comes to the door bringing their whole self to work. The only way we can do that is if we respect the whole self.”

“We want to make sure our people can have a life and make a living at PepsiCo,” she says.

It all comes back to that emphasis on being good by doing good—an idea Nooyi has understood since she was that little girl in India. “We cannot deliver performance without purpose, and we cannot fund purpose without performance.”

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Marketing 3.0 Expert discusses paradigm shift and the now of marketing

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iVo is killing television commercials, while the Internet is making newspaper ads obsolete. Marketing budgets are shrinking, yet marketers are being asked to accomplish more than ever. These changes are reshaping the field of marketing at a fundamental level, says Philip Kotler, S.C. Johnson & Son Professor of International Marketing at the Kellogg School of Management, Northwestern University.

He has shaped marketing thought for more than 50 years, and has helped industry move through marketing paradigm shifts before. What does he see in this new age of marketing 3.0? Connection and co-creation.

Paradigm shift “Marketers are prisoners of an old paradigm,” says Kotler. That old paradigm says that companies need to maximize profits and please shareholders above all else, that customers are rational, and that they are informed by sellers, not by other customers, about purchases.

Communication in the old marketing paradigm was one-way: marketer to consumer. Now, it’s a multichannel, circular, dynamic process that involves rapid communication between marketers, consumers and retailers. No longer do marketers have all the power. Increasingly, the power lies with consumers and middlemen.

Consumers now demand two-way communication and input into the product and services they consume. It’s a dialogue, not a monologue, says Kotler.

“You don’t want marketers to operate in a time warp,” he says. “It would be a mistake not to acknowledge the growing power of consumers and of middlemen … The middlemen are kings now.” As the liaison between a product and a consumer, middlemen/retailers are flexing their muscles as never before, expecting a bigger cut of the profit, and withholding shelf space when it is not given.

In that light, marketers must be experts in listening and predicting. Instead of

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convincing consumers to buy the widget they are already making, they must ask consumers, “What kind of widget do you need?” and create products that are directly aligned with demand. They must ask retailers, “How can this widget make a profit for you AND for us?”

Kotler calls this community building, as opposed to brand building.

Business with values: No bad companies Thanks to the new age of instant information, you can’t be a bad company anymore, says Kotler. If you mistreat your employees, create a shoddy product or leave a carbon footprint too large, your customers will know about it and demand better performance — or become someone else’s customer.

“You don’t want marketers to operate in a time warp,” he says. “It would be a mistake not to acknowledge the growing power of consumers and of middlemen … The middlemen are kings now.”

Marketing thought-leader Philip Kotler says the new age of marketing is connection and co-creation. Marketers must be experts in listening and predicting.

This is good news for everyone. It is the opportunity to combine profit, passion and purpose in the marketplace, so that you can create goods and services that are not only different but also make a difference. This is leading to a new kind of capitalism in the U.S., the capitalism of caring.

Kotler discussed a recent book on this topic, Firms of Endearment, which asks the public which companies they love (like Apple, Amazon or Southwest Airlines) for their business practices. The common denominator they found was an upsidedown approach to stakeholders: instead of a

In Wehner

pyramid of power with the investors on top, these companies place greater emphasis on employees, customers and the communities where they do business. This is reflected in modest salaries for top CEOs and betterthan-average salaries for all other employees; an open-door policy with top management; and a belief that corporate culture is the company’s greatest asset.

The recession has shaped more than marketing budgets — it has reshaped consumer values. People want to spend less, be more satisfied with less and place more value on social and environmental consciousness.

This is what’s behind marketing 3.0, value-driven marketing that focuses on the triple bottom line: profits, people and planet.

It strives to make the world a better place. It utilizes new technology. Its key marketing concept is values. It engages and speaks to the whole person: heart, mind and spirit.

More than ever, people feel defined by and connected to the brands they consume, so they demand those brands deliver more.

Three primary forces shape marketing 3.0, says Kotler: the age of participation, the globalization paradox and the age of creative society.

• Participation: computers, cell phones, low-cost Internet, open source software, and social media make it simple to communicate and collaborate. While marketing 2.0 focused on listening to consumer voices to learn customer insight, in marketing 3.0 consumers are cocreators of the products. R&D has become C&D (connect and develop).

• Globalization paradox: While globalization connects many nations, it also hurts others (note the loss of blue-collar jobs in the U.S.). In that way, globalization often provokes nationalism and protectionism. Buying local is increasingly important to consumers.

• Creative society: Humanity is moving into an age of creativity, where reliance on muscles is giving way to reliance on brainpower.

Consumers are not only looking for products and services that satisfy their needs but also searching for experiences and business models that touch their human spirit.

Supplying meaning is the new value proposition in marketing.

Kotler summarized this way: “The difference between marketing 1.0, 2.0 and 3.0 is whether you’re emphasizing reaching the customers mind or heart or spirit; whether you’re product-centered, customeroriented or values-driven; whether you only see yourself as creating economic value, or creating people value … or environmental value; and whether all you’re concerned with is profits, or social progress and sustainability.”

More about Philip Kotler One of the foremost thinkers in the field of marketing, Kotler is the author of a number of books including Marketing Management (13th ed.), the most widely used marketing book in graduate business schools worldwide; as well as non-academic titles such as Ten Deadly Marketing Sins, Chaotics and Up and Out of Poverty.

He is responsible for new concepts in marketing including demarketing, megamarketing, turbomarketing and synchromarketing. He believes that marketing theory needs to go beyond price theory and incorporate the dynamics of innovation, distribution and promotion systems into analyzing, explaining and predicting economic outcomes and is recognized as being one of the most prolific scholars in the field of marketing.

Philip Kotler visited Mays to present the Dean’s Distinguished Scholar Lecture in September 2010. The Dean’s Distinguished Scholar Lecture Series is an annual forum to present the best in scholarly thought from an array of business disciplines.

Each year, more than 200 business executives and national and international scholars visit Wehner to share their wisdom and experience with Mays students and faculty. Among them during the academic year 2010–2011 were:

David Booth

Chairman Dimensional Fund Advisors

Eduardo Castro-Wright Vice Chairman Walmart

Linnet Deily

Director Honeywell International

Jamey Rootes

President Houston Texans

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Entrepreneurship‌ Business as usual

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he giants of industry make the most headlines and can cause extremes in the economic engine.

Quietly, new firms and ever-be small firms combine to be the steady engine that could, has been, and does. Aggies of all stripes contribute their labor in such ventures.

In this issue of @Mays, we look at the tenets of entrepreneurship illustrated with examples from your fellow A&M business students, current and former.

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Opportunity knocks during economic crisis W

ith businesses closing their doors daily, it’s hard to believe this shaky economy could be the perfect environment for starting a business, but that’s what the experts are saying.

That’s right, strike while the iron is not so hot.

The shifting marketplace means the timing couldn’t be better for a new venture, according to Richard Lester, executive director of the Center for New Ventures and Entrepreneurship at Mays. “The economic environment is in such a tremendous upheaval that uncertainty is created in consumers’ minds,” he says. “Uncertainty decreases brand loyalty. When customers are willing to give their loyalty to someone else, holes are created for entrepreneurs to go in and take market share away from larger, more established companies.”

Building a business by grabbing customers Consider that when a company’s finances are shaky, the focus shifts to reducing costs.

Customer service often takes a back seat.

When this happens, entrepreneurs can build their businesses by coming in to “grab” customers who are being moderately or poorly served as an effect of the cost market.

Lester added that these lapses in good service give entrepreneurs the chance to move into a niche market and fulfill a need for a specific good or service that may have been missing or unsuccessful until their business arrived. “When unemployment exists, an entrepreneur sees training opportunities in the increased amount of human capital available,” he said. “The economy is in such a state of flux that small, nimble, flexible entrepreneurs are best positioned to come in and take advantage of those opportunities.”

Lester encourages prospective entrepreneurs to take advantage of available resources. In addition to the entrepreneurship class that Lester teaches at Mays, the Center for New Ventures and Entrepreneurship partners with the Brazos

professionals as possible to obtain advice when developing a business plan.

MBA grads Chris Nicolaysen ’09 (left) and Ohad Nezer ’09 committed rookie mistakes in their venture SeatKarma. Refocusing on their core business was the correction.

Valley Small Business Development Center to offer an introductory program each spring called “Start-up 101.”

The classes walk would-be entrepreneurs through the process of transforming an idea into a business, with lectures from successful business owners and Mays faculty members delivering real examples.

There are also a number of resources on the CNVE website (cnve.tamu.edu), such as reading materials, podcasts, videos and links to important entities, such as the Small Business Administration and foundations dedicated to entrepreneurship.

“Research shows that you’re more likely to be successful if you have a well-thoughtout business plan,” Lester said. “It forces you to think about all aspects of the business — how it will be structured, current and future financing, and its ability to survive if only 50 percent of projected sales are reached.”

A stable financial projection is crucial, considering one of the reasons many companies fail is because they simply run out of cash. Laying out best-, worst- and mostlikely-case financial scenarios to help ensure survival. The business plan is beneficial for determining the network of personal relationships necessary for building a strong business.

“The hard truth is that trying to find a spot in the marketplace is usually short-lived and fraught with peril; this is the reason many start-ups don’t make it,” he said. So, it is of utmost importance to talk to as many

Learning the hard way If there’s one thing would-be entrepreneurs need to know, it’s that careful planning on the front end is essential. That’s the lesson that Chris Nicolaysen ’09 has learned in the last two years as he and business partner Ohad Nezer ’09 have launched and operated SeatKarma.com.

The site is an event search engine that scours ticket resellers to find the best secondhand market prices for sporting, theatrical and musical events. Enhanced venue maps to assist in selecting the best seat, photos taken from the stands in various positions in the venues giving true perspective of the view of the court or stage.

The venture started with a lot of enthusiasm, says Nicolaysen. “As entrepreneurs, you get excited about your idea and there is a feeling of urgency,” he said. “You think, ‘We have this really great idea, and if we don’t act on it, next week somebody’s going to have the same idea and beat us.’”

In addition to a strong business plan, entrepreneurs need a strong technical and tactical agenda to support the business plan before beginning, Nicolaysen warns. While that sense of urgency can be a powerful motivator, entrepreneurs need not rush the planning stage and jump straight into execution, or risk being unprepared once the business is launched.

That’s what happened at SeatKarma.

They were mentioned by prominent blogs such as TechCrunch and LifeHacker, which directed enormous traffic to their site. It

DATABITS

2009 set a record for the number of firms started in the U.S. (Kauffman 2010)

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overwhelmed their system, leading to delays, which made some of those new customers — more than 100,000 in the first months — frustrated and unlikely to return.

Nicolaysen says they learned quickly their failure. They were spending money on marketing, but not addressing underlying site functionality problems. Sales from increased marketing did not equal profitability.

“We had to increase the conversion rate of people that entered the site to people who actually purchased a ticket,” he said.

Flashy marketing wasn’t going to do that.

Better design and technical execution would.

Nicolaysen and his partners invested time and personal money into working with website developers to improve the site, but met challenges. They had outsourced the work to a low-cost provider. As it turns out, low cost meant low quality. They eventually found a third business partner to handle site development, which has been a tremendous asset, says Nicolaysen. Now, they are no longer pouring money from their own wallets into the business to hire help, and the work is done correctly.

“We had to redesign it from the ground up, technically,” he said. “We’ve spent a whole year planning and improving our offering … taking those steps that we didn’t do the first time.”

All three partners have other jobs in addition to their work with SeatKarma.

This is a challenge and a blessing, says Nicolaysen, who works in IT for an oil equipment manufacturer in Houston. While it’s hard to juggle the demands of two jobs with his family responsibilities (he has three children under the age of 6), knowing that he has a steady income separate from his entrepreneurial ventures allows him to be a better entrepreneur.

“You’ve got to have some stability,” he says. “Even if you have a great idea that will be successful, it will probably take much longer than you expect to turn a profit. In the meantime, you still have bills to pay.”

He offers advice for others starting out: “Look for something stable and then work on your ideas on the side with every spare moment that you have outside of your other priorities. Having that stability will give you the peace of mind that you need to be creative and try new things … to fail without wondering if you’re going to be evicted next month.”

The new and improved SeatKarma.com launched in March 2011.

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Be your own boss? Lose your shirt?

How to evaluate a potential business and avoid common pitfalls

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efore you quit your day job for that business idea you have, there are things you should consider, says Richard Lester, executive director of the Center for New Ventures and Entrepreneurship at Mays,.

One of the things that will be most important for you is to be able to separate what’s a good idea from a bad idea.” This opportunity recognition and evaluation is an essential skill, says Lester. If you want to succeed in business, you can’t operate with the philosophy of “‘this is a neat idea and it feels good in my gut, let’s go invest some money in it.’ ” Long before you start building the widgets you hope to sell, if you don’t take the time to do your homework, your business may be doomed.

Dollars and sense: Financial feasibility You must examine the feasibility of a business. The first questions to ask are financial:

o What are the start-up costs? o Where will I find that money? o Will there be enough value in the product that I will be able to sell it for more than it costs to make it?

To find the answers, Lester recommends conducting primary research. Talk to people in the industry you hope to enter. Ask about their business models, costs and revenues. Talk to potential customers. What are their needs and expectations? Use focus groups to gauge potential customer response. “Get an idea of whether they are going to want your product at the price that you’re willing to offer it,” he suggests. Ask what improvements could make your offering the product of choice in the marketplace.

Marketplace analysis is also essential.

Take time to fully understand the industry, identifying the market leaders and latest trends to follow. Is the industry growing?

How will your product fit into the field?

Will it complement or disrupt current businesses? If you plan to go head-to-

head with another business, what are their areas of weakness that you intend to exploit? How will you differentiate your business?

Be aware of what the leaders are doing, even if you aren’t planning to follow them. Being informed and aware is vital to your venture’s success.

Are you cut out to be an entrepreneur?

Defining characteristics of entrepreneurs include passion, patience, detail-oriented, creativity, adaptability, vision and drive.

Passion is the key ingredient. You’ve got to be completely sold on the business, willing to make the sacrifices necessary to make it work. That might mean a Ramen noodle diet, a junky vehicle and long workdays, seven days a week.

“Those sacrifices will hopefully pay off in the end, but if you’re doing this to create a paycheck, your chances for success are slim,” says Lester. Most new businesses don’t start out profitable, so since you may be working without a paycheck — or worse, in a deficit — for a while, you must have another motivation for the business.

Another aspect of evaluation is building partnership networks. “No business survives on its own,” says Lester, stressing the importance of the team you’ll need to make a successful venture. Even if you are the company’s only employee, others are required to succeed. Partners include customers, suppliers and peers in the industry that will be a resource for information, as well as strategic alliances, such as an outsourced firm to handle administrative costs or tax auditing.

That team also includes your personal support system. If you have a family, spouse or friends, are they willing to assist you in making your entrepreneurial dreams come true?

When you examine the feasibility of your venture, if you see problems in any of these areas, you have reason to pause and further investigate whether or not the opportunity is as good as it seems.

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7 pitfalls of business failure

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You start your business for the wrong reasons.

Would the sole reason you would be starting your own business is to make a lot of money? Do you think that if you had your own business that you’d have more time with your family? If so, you’d better think again.

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Poor management Many a report on business failure cites poor management as the number one reason.

3

Insufficient capital A common fatal mistake for many failed businesses is insufficient operating funds. Many businesses take a year or two to turn a profit.

This means you will need enough funds to cover all costs until sales can eventually pay for these costs.

4 5

Location, location, location

Lack of planning It is critical for all businesses to have a business plan. Many small businesses fail because of fundamental shortcomings in their business planning. It must be realistic and based on accurate, current information and educated projections for the future.

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Over expansion A leading cause of business failure, over expansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum.

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No website If you have a business, you need a website. Period.

*By Patricia Schaefer, used with permission from businessknowhow.com

Engineers to entrepreneurs A&M engineering students offered certificate in business at Mays

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ngineering students are prepared by their degree to design and build most anything, from cities to computers, but one basic component to success is barely mentioned in their classes: business concepts. A familiarity with business, especially management concepts, can turn an engineer into an entrepreneur, or a technical expert into a manager.

To meet this need, the Center for Executive Development at Mays began offering an accelerated certificate program in business management created specifically for the needs of engineers. The course, offered each August, is three weeks of 8-to-5 days in the classroom. The 50 student participants cram in 120 hours, or the equivalent of three 3-hour courses, in that short span. The students are drilled in the basic principles of accounting, finance, management, and marketing.

It’s intense and exhausting, but a worthwhile investment in their future careers.

Max Leutermann ’12, a computer engineering major, says that though he knows about leadership through his involvement with the Corps of Cadets, he wanted to learn more specifically about management in a business setting. He hopes that the certificate from Mays will help him gain admission into an MBA program in the future.

“Engineers with MBAs are really sought after,” echoes Matt Fransted ’10, a nuclear engineering major and naval officer. He graduates soon and will continue his position with the Navy, working on nuclear reactors. He’s looking ahead, making plans to earn an MBA, and after his military career is finished, start his own business.

Chemical engineering student Kelsey Fuller ‘10 is preparing for a career with ExxonMobil after graduation. She was interested in the certificate program, as she will soon be working in a corporate environment — something she knows little about. A firm grounding in the basics of business will be helpful as she makes workplace decisions, especially since she aspires to be a manager. While some of the

material covered in the course, such as team building, was not new to her, she appreciated the finance and accounting lessons, as they provided practical information she’d never encountered before.

Several MBA programs around the country, including Harvard’s, offer similar certificates, but offering such a course to undergraduates is a unique aspect of the Mays program.

DATABITS Economic crisis survey (Luntz, Maslansky Strategic Research, Sept. 2008)

Success of our economy depends upon entrepreneurs • 70% agree Who do you have most faith in to guide American economy?

•O wner of a successful small business 56% •C EO of a Fortune 1000 company 14% • A member of Congress 14% • Other / don’t know 16%

mays.tamu.edu 15

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Philanthropreneurship Gowalla Executive Andy Ellwood ’04 discusses sustainable philanthropy

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hat would happen if the hustle of the entrepreneurial spirit were brought to the philanthropic world? What if every nonprofit organization had a for-profit business to sustain it?

What would happen if the passionate and the called gave no thought to whether they have the financial support needed to continue their work?

What if there was a truly sustainable model to create a lasting impact in the neediest communities?

These are the questions Andy Ellwood ’04. As the business development executive at Gowalla, the location-based social experience service, Ellwood says he wants greater collaboration between nonprofits and corporate entities, creating sustainable wealth that supports both.

This idea was born when he was working as a sales executive for a private jet company.

In his interactions with high net-worth individuals, he frequently heard them lament, though they wanted to support good causes, the ROI was low — that the money they gave was not utilized as efficiently.

This conundrum intrigued him.

Generally the brightest minds in business don’t work for nonprofits. What if he could help bridge that gap, injecting his entrepreneurial know-how into social causes?

His favorite example of this happened in August 2010. One of his first big projects at Gowalla, the project was a union between his company, AT&T and TOMS Shoes. Perhaps you’ve heard of TOMS. Slipper-like canvas shoes, they are replacing flip-flops as

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Andy Ellwood ’04 envisions greater collaboration between nonprofits and for-profits, creating sustainable wealth that supports both.

“We need more companies that understand the opportunity for impact that they have, not in one-time ‘check it off the list’ charitable contributions, but with a true understanding and integration into the very soul (or in this case sole) of their company’s mission.”

the footwear of choice on college campuses.

When you buy a pair, a pair is given away to children in need. TOMS Shoes was approaching the milestone of its millionth pair of donated shoes. AT&T, a major supporter of TOMS, wanted to capitalize on the celebration.

The promotion worked like this: Gowalla users could “check in” at any place where shoes or cell phones were sold. Doing so would enter them in drawings for TOMS, AT&T smartphones and netbooks, and the grand prize, a trip for two to Argentina to participate in the “shoe drop” when the millionth pair of TOMS would be given away.

Gowalla users could get a feel for the history of TOMS Shoes by taking a “trip,” checking in at sites significant to the company (such as the first store where they were sold) and collecting “pins,” like stamps on a virtual passport.

The promotion raised sales for AT&T and TOMS, and awareness for their global philanthropic work. Thousands of kids in Misiones, Argentina, received new, highquality shoes — perhaps for the very first time in their lives. By every metric, this was success.

“We need more companies that understand the opportunity for impact that they have, not in one-time ‘check it off the list’ charitable contributions, but with a true understanding and integration into the very soul (or in this case sole) of their company’s mission,” Ellwood wrote in a blog post about the event.

While not every partnership Ellwood forges between Gowalla and other companies (such as Disney, CNN, the NBA, NASA and Whole Foods) has a philanthropic spin, Ellwood’s personal tagline is “connecting good people with great opportunities.” This includes giving a “philanthropreneur” flavor to every project possible. “The more I talk about it, the

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Gowalla cooperated with AT&T and TOMS Shoes to raise awareness of their global philanthropic work. The pay-off? New shoes for thousands of children in Argentina.

more energized I get. What if we led with entrepreneurs and followed with clean water, education and healthcare?” This model would turn donations into true investments, so that a donor could give one time and make a difference perpetually as the business continues to grow.

Ellwood will keep developing this idea as he grows his own entrepreneurial toolkit by building Gowalla, which launched in 2009. Since then, the company has grown to 27 employees (he was the eighth hire) and 600,000 users. In his experience there

are three defining characteristics of an entrepreneur: persistence, hustle and selfcoaching. He would know. He started his first business at the age of 12 — a business he sold, and which is still in operation today.

“The most successful entrepreneurs I know stick to it no matter what,” he says.

That means no expectation of vacations or working from 9 to 5. Work and life are fully integrated.

It can be lonely if you’re the sole employee. There are no co-workers to celebrate successes or commiserate about

setbacks, no one to give feedback on your performance. Here, self-coaching is invaluable.

“You’ve got to look honestly at your work and see where there’s an opportunity to improve, to make the business better,” Ellwood says.

What happens when you put those concepts to work philanthropically? You improve your business — and you improve the world.

See more at andyellwood.com, or go with him on Gowalla at gowalla.com/andyellwood.

S AV E T H E D AT E J u n e 11, 2 0 11

Mays Summer Learning Seminar 2011 Business in a Turbulent Economy Join us for a day-long seminar exploring challenges and opportunities in the turbulent global economy. This is a unique opportunity for graduates of Mays Business School to enhance their knowledge, network with fellow former students, and reconnect with Texas A&M and Mays.

Keynote presentations by:

Mark Doutzer

Chief Economist and Research Director, Real Estate Center at Texas A&M University

“The Economic Outlook for Investors and Business Decision Maker” and Asghar Zardkoohi

T.J. Barlow Professor of Management, Mays Business School

“Domestic and Global Economies and the Implications for Human Resources”

Saturday, June 11, 2011 • Mays Business School, Wehner Building For more information and to register, visit mays.tamu.edu/sls2011 mays.tamu.edu 17

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Just say “iiwii”

Warnock’s advice applies to students, entrepreneurs and those in traditional business environments.

Serial entrepreneur shares practical career tips

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hat does it take to succeed as an entrepreneur? A degree from a prestigious school? A great business plan?

A really nice suit? Larry Warnock ’83 says it’s simpler and more fundamental then that: creativity and passion.

“The people who become successful have creativity and passion, and when those things blend, exciting things happen,” he says.

Successful entrepreneurs, according to Warnock, “have the passion to stick with their idea even though everyone tells them it’s the stupidest thing they ever heard of.”

They also have the creativity to develop a new product or service, or see a market in a new light. Starbucks didn’t invent coffee, but they did invent a new way of serving it.

Entrepreneurs must see opportunities in the marketplace where others don’t.

Warnock’s an expert: he has more than 25 years of experience working with startups, most recently as the president and CEO of Phurnace Software. B.M.C. Software acquired Phurnace earlier this year, freeing Warnock up to return to his passion — being involved with very young companies.

He is now an advisor with DFJ Mercury, a privately held venture capital firm.

“Entrepreneurs are the true creators of wealth in the economy. They are the creators of ideas, of business, of jobs and of wealth.”

Every major company started out as “two or three people in a garage … drawing pictures on the back of a napkin. Every business started as an entrepreneurial venture.”

Entrepreneurship is for the resilient because for every product that sells, there are probably 50 that flopped. “It’s a high-

DATABITS Gazelles (3-5-year high growth) = 1% of all firms, yet comprise 10% of all net new jobs; on average 88 jobs per year. Average firms net 2-3 new jobs per year (Kauffman-2010)

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1

Interact with your customers regularly. Whether your product is floor cleaner or toothbrushes, get out there and see the product in use.

Talk to the people who use it. You will glean new ideas and insights that will propel the business forward.

2 Larry Warnock ’83, an advisor to several early-stage technology companies, calls entrepreneurs “the creators of ideas, of business, of jobs and of wealth.”

stakes poker game …. you’ve got to try again and again and again … and occasionally you get a Facebook. Occasionally you get an Apple.”

Advice and lessons learned in the classroom will only get you so far, says Warnock. There is no one recipe for a successful venture or career, and frequently what you major in will have little bearing on your career (Warnock has a degree in marketing from A&M). Many times you will learn the skills you need for your job on the job, or while you’re creating your job.

Successful people bring their creativity to an opportunity and have the passion to drive it through. That’s the secret to success.

“Creativity and passion … These really differentiate successful business people and successful entrepreneurs.”

In addition to his entrepreneurial ventures, Warnock frequently guest lectures in the MBA program at the University of Texas at Austin and the Acton MBA program of Hardin-Simmons University. He serves on the executive committee of the board of directors for the Austin Technology Council, a non-profit that focuses on the advancement of the technology community in central Texas. He is also an advisor to several early-stage technology companies on their go to market strategies and fundraising activities.

Be decisive. This is something Warnock says he learned through his time in the Corps of Cadets at A&M. “Learn how to make tough decisions and make them quickly … then act.” He says too often he sees “death by duck bite,” where a manager or company fails to act decisively and is then nibbled to death by small, wrong decisions. If a tough decision is in front of you, bite the bullet. Don’t make a half-decision.

3

Be nimble. Once you’ve made a decision, you may need to change your mind later on. “Even if you’re on the right track, you’re going to get run over if you just sit there.”

4

Maintain a healthy paranoia. Somewhere there is an entrepreneur gunning for your business that will up-end you if you’re not prepared for the competition.

5

Sometimes all you can do is say “iiwii” or “it is what it is.” There are certain situations you can’t change. When something is out of your control or not going your way, apply your passion and creativity on the things that you can affect. Then move on.

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Have a vision and execute with a passion. What is passion? “A feeling at your core that this is important to you.” That’s what you should build your business or your career on.

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A bite of business Mays student-entrepreneur launches food magazine

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Erin Eisenrich ’11 created the food magazine More-ish to boost knowledge of local dining.

Along the way, she carved up some business savvy.

mm, that tastes more-ish,” observed Grady Hughes, grinning as he taste-tested his wife Edra’s savory home cooking. In the Hughes family, “more-ish” means “so delicious you want another bite.”

Two generations later, self-proclaimed foodist Erin Eisenrich ’11, the granddaughter of Grady and Edra Hughes, recently translated her passion for the culinary arts into an entrepreneurial venture.

After deciding against spending the first part of her senior year studying for the LSAT, Eisenrich instead produced More-ish, a magazine created to “point its readers to unique and meaningful dining experiences that are so yummy you want another bite.”

“There are a lot of unknown places around College Station that my friends hadn’t heard of,” Eisenrich said. As an enthusiast of local dining, she was well-informed about area restaurants. She started a Facebook group to discuss restaurants with her friends and fellow foodists. “By the end of the night, it had over 200 members,” she recounted. That number eventually grew to 1,000+ people who logged in weekly to read Eisenrich’s reviews of local eateries.

Followers eventually began requesting access to past reviews, so Eisenrich turned to blogging, creating thefoodistreviews.com.

She toyed with the idea of a book, then discussed the idea of a magazine with her family. “We took off from there.”

More-ish was produced in seven weeks, start to finish.

distribution. In one weekend, Eisenrich’s team distributed 8,000 of the 10,000 copies.

Though there were hard moments, Eisenrich says she believes all the challenges she encountered were worthwhile. She learned valuable skills along the way about photography, print, layout, and advertising, sales, finance and management. “It was like eight different kinds of internships all in one,” she says.

And despite all of the challenges, “Somebody always pulled through. Different people along the way got very excited and stuck with it.” Ultimately, she said, “It was a lot of fun.”

Rapid-rise challenges Despite her eventual success, such a rapid turnaround time meant a significant set of challenges for Eisenrich and her small staff: sister and marketing director Emily Eisenrich ’12, photographer Emily Kiel ’09, and a pair of designers.

The first two challenges for the team were to choose a printer and a name. Once those issues were settled, they looked to a larger challenge looming ahead – selling advertisements to fund the magazine.

One of the first lessons that Eisenrich, a management major, learned was that restaurant owners wanted to help, but with the demands of a quick turnaround, might not have the time or resources to buy an ad. However, she said, “If I could fully explain to them the vision of the magazine and help them to see that, then they would get really excited. Getting past that point … that was the hardest part.”

Eisenrich also had to reach out for help in other ways. Two weeks before the magazine went to print, she hired the design duo Drifting Creatives, Gavin Braman ’09 and Martin Hooper ’09, who worked intensely – right up until the night before Hooper’s wedding.

When the magazine came out, Eisenrich’s parents helped with the

Her just desserts As a topping to all the great learning experiences, one of the huge rewards for Eisenrich has been the unimaginable response to More-ish. “They are flying off the shelves.”

“We’ll stick them down in some obscure corner of a restaurant and they’re gone – 125 copies just disappear.”

In addition, she has received laudatory phone calls, gets frequent positive postings on the More-ish Facebook page and has had constructive feedback from the restaurants that she reviewed.

Another issue is already in the works and many restaurant owners are asking what they need to do to be featured. You can’t buy your way into a good review, though, says Eisenrich. Her pen and her palate are not for hire so that she can maintain the integrity of her publication.

More food advocate than food critic, she said, “If I don’t like a place, I don’t write about it. I want to give people great places and really good experiences.”

Eisenrich loves hearing that her readers carry a copy of the magazine in the car with them as a reference guide for when they want a quick bite somewhere new. Like a serving of tasty home cooking, it has left quite a few people with a desire for More-ish.

mays.tamu.edu 19

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For the children Mays former students create nonprofit to benefit children in Honduras

Robert Furr ’04 and Jose Mahomar ’04 turn a class project into a family center that serves Honduran children and their families.

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he barrios marginales where Jorge Mahomar spends his days are not safe.

Well-educated men from wealthy families, like Mahomar, don’t go there. They would be assaulted, robbed, maybe killed.

The streets of Unidad y Fuerza on the outskirts of Tegucigalpa, the capital city of Honduras, are full of gangs, drugs, guns… and children. Children who have no place to go, no safe place to play, little food in their stomachs and often no shoes on their feet.

Jorge is not afraid of these neighborhoods, not even at night when the policia won’t go there. He is the one you call when you need something.

He gets a lot of calls. My daughter is sick, we have no food, we need a place to stay…Will you help me?

Gang leaders, covered in tattoos and used to the quick justice of a handgun, would not think of harming Jorge. He has devoted more than 30 years of his life as well as all his resources to the children of this city.

Some he is able to rescue, see them go to school, find jobs, make a good life. Others he has lost to gangs, drugs, and an early death.

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He is not an old man, only in his 50s, but he looks tired, worn.

He cannot do this work on his own forever. There are too many needs and not enough resources.

Global impact It is fall 2003. Robert Furr ’04 and Jorge Mahomar’s son, Jose ‘04, begin their final year at Mays. Both accept the invitation to participate in the Academy for Future International Leaders (AFIL), an interdisciplinary program at A&M that allows outstanding undergraduates the opportunity to focus on global issues.

One program requirement is to complete a project of global significance that applies their international leadership skills within the campus community. Students are paired based on their interests and asked to complete a sustainable project that promotes international awareness.

Robert, a management of information systems major, wants to support an orphanage or school.

Jose, a finance major, knows of an immediate need—the children his father works with in Honduras. Perhaps he could organize an A&M clothing drive?

Program advisor Susan Mallet introduces Robert and Jose, suggesting they combine efforts. With input from Jorge, the project evolves ambitiously: a family center in Honduras that serves children and their parents.

Robert and Jose are full of excitement. If every third student on campus gives $1, they will meet their fundraising goal of $15,000; enough to build and supply a simple, onestory facility.

As they begin the campaign, however, obstacles mount. They are in competition with every student organization on the A&M campus, all raising money for their own causes. Due to university regulation there are restrictions on their solicitations on campus, as they are not affiliated with a recognized student group nor are they an established non-profit.

They raise some initial funds and plan

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to continue the work after graduation. Jose lands a job with an investment bank in New York City. Robert deploys with his National Guard unit to Iraq.

Tragedy leads to blessing The project might have stalled there, had it not been for a tragic accident: their advisor, Mallet, drowned while on vacation in the summer of 2004. “She had done so much to encourage us. We wanted to do this to honor her,” says Jose.

With renewed fervor, the pair continue planning for the family center. They approach the next class of AFIL about teaming with them and receive initial interest. Then the day after Christmas 2004, the Indian Ocean tsunami devastates millions in India, Indonesia, Sri Lanka, and Thailand. The AFIL students instead turn toward that crisis.

Jose and Robert do not give up.

In 2005, a new class of AFIL students is approached with the opportunity to partner with “Building a Future.” Jordan Baucum ’06, a marketing major, joins the cause and begins looking for grant opportunities, including his internship employer: Chevron.

Suddenly, the project is propelled light years ahead: Chevron provides a $30,000 grant for the construction of the facility, grander than the Aggies’ original plans. By 2006, the Texaco Family Support Center is constructed in Unidad y Fuerza. (Texaco is the Chevron brand in Latin America.)

A beacon of hope Robert was still in Iraq when the center was being constructed. He describes his first visit to see the finished product: driving over unpaved, pothole-cratered roads, past tattered shacks, then pulling up to the brightly painted family center, so vibrantly different from all its surroundings. “It was amazing…I could feel the good that was happening…The building is one of the nicest ones in the community.” It’s also one of the tallest, he says, so you can see it from a distance, a beacon of hope amid the poverty.

Today the center serves 60-100 people per day. It’s not a daycare, stresses Robert, but a place that serves the whole family. For kids, it offers a safe place where they can play and receive supplemental education and meals.

For adults, it’s a place to hone essential skills like reading and writing. Recently the Borlaug Institute for International Agriculture provided an introduction to the Junior Master Gardener program, teaching

“The kids at the center are in love with learning. They love to draw and read, or have someone read with them.” children and adults basics about nutrition and growing food.

Many of the children who spend time at the center come from single-parent households, says Jordan. Fathers are often absent: some have left for the U.S. to seek work; some are in jail; others have been killed due to gang activity. In this circumstance, a mother has to choose between working to provide for her family or staying home to care for her children. The center allows these women to work, giving them the pride of earning a paycheck, as well as the peace of mind of knowing their kids are not roaming the streets, easy targets for gangs.

The work is important to Jordan. He knows the role educational opportunities have had on his own success: as a child, he struggled with learning. Without years of speech therapy and tutoring in reading, and the help of dedicated parents and teachers, he would have fallen behind his peers, and been labeled a “special education” student.

“But because I had all the best, I was able to succeed and thrive, in high school and at A&M.” He wants to provide children in Honduras with opportunities for the same kind of success.

“It doesn’t have to be big. You just have to get started.”

Building a Future added a fourth board member in David Clayton ’07, a fellow AFIL student. Each of the board members lives in a different part of the world (Dallas, New York City, San Francisco, and South Africa).

They communicate often as they make plans to expand the presence of the nonprofit.

In addition to seeking funding from corporations and individuals, they promote Building a Future: by coordinating visits for student groups from A&M and other colleges that visit Honduras for service trips.

The Aggie Men’s Club has made several trips to Unidad y Fuerza and the surrounding area. Recently, a group of these students built three houses for impoverished families there.

Organizing student trips is an important function of Building a Future, say Robert and Jordan. It’s an opportunity for a lifechanging experience for students, as they are exposed to new cultures and environments.

More than a learning experience, it’s a gateway for involvement in global humanitarian efforts.

Being an advocate for social change in your own community—speaking out for children who lack access to education, health care, and nutrition is a great place to start.

“What you do doesn’t have to be big. You just have to get started.”

DATABITS

About 1,600 colleges and universities offer more than 2,200 courses related to entrepreneurship, compared with just a few in the 1970s.

Eighty percent of all U.S. colleges and universities now offer courses in entrepreneurship.

(Katz 2003, 2004) (Kauffman 2010)

mays.tamu.edu 21

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File your taxes, then go shopping

DATABITS

Companies less than five years old created two-thirds of net new jobs 1980–2007 (Kauffman-2009)

Mays student wins $10K prize for innovative idea

I

t doesn’t sound like much fun, but it does sound like a pretty good idea: Tax filing kiosks at busy retail locations.

That’s the idea Kyle Klansek ’13 entered in the Coinstar Inc. Next Big Idea contest, which asked college students from around the country to submit proposals for kiosk businesses.

Klansek’s submission won the top prize of $10,000.

Not bad for an idea that was not selected

by Klansek’s teammates when he presented it during a brainstorming session and that Klansek submitted individually at the last minute. “I didn’t think there was any way that it would go anywhere,” he says.

Klansek and teammates were participating in the competition as a requirement of an environmental design class at A&M, which focuses on creativity and entrepreneurship. The team collectively submitted another idea to Coinstar — the details of which Klansek prefers remain confidential so that he can possibly pursue the business. While the idea didn’t win, Klansek says he believes it has potential.

Klansek’s “IRS kiosk” fit Coinstar’s three criteria for a Next Big Idea winner, explained Alex Doumani, vice president of engineering at the company. “It adds good, meaningful value; the concept serves

SPOTLIGHT

Justin Martin, MBA class of 2011, presents to the industry professionals, venture capitalists, and faculty who’ve gathered as part of the annual MBA Tech Transfer challenge.

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@MAYS Spring 2011

Kyle Klansek ’13’s “Next Big Idea” in a Coinstar competition – an “IRS kiosk” that is designed to be installed at retail locations around tax time – netted him a $10,000 prize.

a sizeable consumer market; and it is innovative, creative and different.”

Doumani said the tax kiosk concept fits a sector with great growth potential in the category of ”pop-up” retail. These are shops, or devices, that meet a large but temporary consumer demand, and then can be broken down and put away until the next time of need. For example, each October, “there are many pop-up stores that serve a significant consumer need centered around the Halloween theme, then go away,” said Doumani.

“We see that this could be the same with the IRS kiosk. It has a large potential and it serves an attractive retail market.”

Doumani didn’t provide details, but the concept for the tax-filing device would be to install it at retail locations as April 15 rolls around. "Kyle showed ingenuity and ability,” said Doumani.

Doumani says the IRS kiosk could fit in the growing market for self-service applications for government services. This year, several states have received positive reviews for installing kiosks where citizens could renew their driver’s licenses and conduct other activities at motor vehicle offices. In addition, a number of libraries are installing self-service kiosks that patrons can use to check materials in or out.

Klansek, in his second year of studies at Mays, has not yet declared a major, but says he is leaning heavily toward management with an entrepreneurship focus. This experience with the Coinstar competition has been a great motivator for him to start thinking of himself as an entrepreneur. He intends to invest his prize money into a new venture while he is still a student, as he’ll have greater access to resources through the Mays Center for New Ventures and Entrepreneurship.

“Sometimes all you need is this kind of push,” he said. “Winning the contest has urged me to pursue my own business.”

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A model student

Mays student organizes fashion event for charity

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n September 2010, shoes clicked, cameras flashed and editors critiqued Spring 2011 fashion collections in New York, Paris, Milan and…

Bryan/College Station?

Thanks to the passion of Mays marketing graduate student Paige Melvin ’09, Bryan/College Station joined the ranks of the world’s most fashionable cities through the event Fashion Week B/CS. The event heightened awareness for fashion and the arts in the area, and Melvin donated the proceeds of the event, Above University $3,572, to local nonprofits Carpool, Drive along Habitat for Humanity and the Brazos Northgate, Valley Community Action Agency. one of several Though Melvin does not have a fashion shows background in fashion (she holds an will soon begin. undergraduate degree in international affairs and a minor in business from Mays) she said that she “is a huge fan of what some of the young designers are doing with their businesses.”

“Working with young designers and community leaders definitely helps hone that skill, and it is something you can stretch across fashion and the arts, but also into finance, corporate cultures and more,” says Melvin.

Fashion Week B/CS featured an event each night to showcase local talent, such as a hair show with an “Alice in Wonderland” theme. The maission was to create an atmosphere where community members could interact, enjoy the arts and support local businesses. Events were free, with VIP seating available for a premium.

Many A&M students modeled and volunteered behind the scenes.

Local artists buzzed about Fashion Week BCS, enthusiastic to showcase With a backdrop of sponsor names, Paige Melvin ’09 [4th from right] and her team enjoy their creations. From T-shirt designers, the success of this first-time event. to hairstylists, to burgeoning couturiers, these fashion enthusiasts participated in a venture unique to this area.

A host of local businesses recognized Melvin’s passion and belief in the project’s.mission and gave logistical and financial support.

More than $40,000, mostly in-kind donations, was given including all event space.

Melvin’s goals for next year surpass this year’s. She hopes to give away more money and to set up a foundation for youth arts education programs.

mays.tamu.edu 23

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Empowering entrepreneurs Mays students assist South African business owners

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zuvukile “Rasta” Mfengwana’s silk screening business is a small operation: a modest workroom in a community of dilapidated shacks where he and his wife design and create items by hand to sell to tourists in Cape Town, South Africa.

Rasta leans over his worktable, brushing blue paint over a screen-covered tee shirt.

He explains the process to several women who cluster around him. Some of the women are single mothers in the community; their children play nearby. Rasta, of limited means himself, is training the women in the hopes that providing them with a trade will help lift them out of poverty.

The other women watching Rasta work aren’t there to learn silk screening. They have travelled thousands of miles to offer the entrepreneur knowledge they’ve learned from textbooks in the hopes of improving his business, and through it, the whole community. One of these women is a Mays student.

In return, they will receive a hands-on lesson in small business operation they could never find in a classroom.

Lauren Dunagan ’11 was one of the students that worked with Rasta through the Entrepreneurship Empowerment in South Africa (EESA) program this summer. “It was a little overwhelming,” she recalls of her first visit to Old Crossroads Township, the impoverished area where Rasta lived and worked. “I felt like I was in over my head.” However, once she and teammates got to work, the experience went from overwhelming to amazing. “I learned an incredible amount. Way more than I could have gotten in a classroom.” By the end of the program, Dunagan had helped lay the groundwork for Rasta’s business to expand exponentially.

“My working with Lauren and her team opened new frontiers for me,” said Rasta.

“This was an experience of a lifetime.

Lauren and her team showed me ways and found paths I’d never even dreamt of. These guys made me identify my mistakes and showed ways to correct them. I’m now more

24

@MAYS Spring 2011

confident than ever before.”

Now, Rasta is poised to do more than increase his sales—he’s also ready to offer work to the single mothers he’s trained.

A brighter future Though apartheid officially ended in 1994, black business owners in South Africa still struggle to find equal In Africa, Lauren Dunagan ’11, Paul Morin ’10, Rishabh Mathur ’10 and opportunities Kelly Kravitz ’13 learned the give and take of teaching. The give was sharing in the whitetheir classroom knowledge with entrepreneurs in impoverished Old dominated Crossroads Township in South Africa. The take was how much they learned society. Amid the themselves. Lessons that could not be found in any traditional classroom. economic boom now taking place in Cape Town, the country’s first year that the program was also offered principal city, many are getting rich. For through the Mays Center for New Ventures other businessmen and -women, education, and Entrepreneurship. Three Mays students funding, and success remain out of reach. and one other Aggie participated in the “You could see where apartheid had Creating knowledge and highly selective course, learning valuable left its mark. You could see the strong developing future ethical business leaders for a global lessons about business andsociety. politics as they division between the blacks and whites,” created value for others. said Dunagan, who noted the great wealth The South African entrepreneurs he disparities present: BMWs drive past rows of worked with inspired Paul Morin ‘10, a shacks where hungry children play. student in the Professional Program, to think But you can also see how people are more about his own future. The business moving past old prejudices and working owners had taken great personal risks and toward a brighter future, she says. overcome adversity to build a successful Stimulating the economy by aiding the venture, he says. growth of the enterprises of these under“I have always hoped to start my own resourced small business owners is the goal business one day, but I always run into so of the EESA program, a joint effort of the many doubts and end up making excuses.

University of the Western Cape, Spears After seeing what these entrepreneurs are School of Business at Oklahoma State University, and the Leeds School of Business capable of in spite of everything working against them, there are no more excuses I or at the University of Colorado. This is the

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anyone else I know can make,” he said. “We learned more from these entrepreneurs than we could have ever shared with them.”

Social entrepreneurship, the future of non-profits Kelly Kravitz was one of the other Aggie participants. A graduate student in the public service and administration program at the George Bush School of Public Policy at A&M, Kravitz says she didn’t know much about business when she began the six-week course in May. Half of each day of the EESA program was spent in a classroom in Cape Town, where Kravitz got a crash course in entrepreneurship, as well as learning the societal factors that hinder the small business owners she worked with. The other half of the day was spent in the field, working side by side with emerging entrepreneurs.

Participating businesses must have been in operation for at least two years. Their ventures ranged from catering and arts and crafts businesses to community newspapers and small manufacturing operations.

Some of the business owners were skeptical at the onset of the course, and were not receptive to having their operations scrutinized by American college students.

By the end of the six-week program, however, all were won over as the students presented four “deliverables” to each business owner.

The deliverables, including websites, revamped bookkeeping systems, and marketing campaigns, were unveiled at a closing dinner event. “It was amazing.

Some of the business owners cried,” said Kravitz. “They were so thankful. They told us ‘God sent you to me.’…We saw businesses transformed.”

In an environment where fraud, corruption, and poverty are prevalent, Kravitz says she learned a lot about what it takes to create a sustainable business. She hopes to use the experience and her degree from A&M to pursue work in the non-profit sector developing a social entrepreneurial venture—a business that is dedicated to serving a needy population by giving them a sustainable source of work and income. “I see that as being the future of non-profits,” says Kravitz. They will find ways to be independent of donations and will become profit-generating businesses with a mission to improve lives.

Beyond the basics Students in the program were split into teams of four to act as consultants; each

Education is the most powerful weapon which you can use to change the world.

Nelson Mandela, President of South Africa 1994–1999

team had two entrepreneur clients. Rishabh Mathur, an MS-MIS student at Mays, hopes to go into business for himself as a consultant after he graduates in December, so the experience was particularly instructive for him.

One of the clients Mathur’s team worked with was LM Tax Consultants. The three partner/owners are the only employees, but Mathur says they are planning expansion, including new hires and a second location.

At LM, growth was happening so rapidly that owners could scarcely keep up with the workload, let alone take time to evaluate their business and create a workable infrastructure. The EESA students examined all of their operations and then set to work to provide them with immediate solutions in IT, marketing, operations, and HR. Mathur and teammates overhauled the company’s website, adding web marketing initiatives, SEO, and analytics. They collected information from invoices to create a warehouse of data, which they analyzed and segmented to determine a targeted marketing strategy. Finally, they created printed marketing materials.

One of their most significant achievements was the creation of HR document templates, such as leave requests and time sheets, so that when the company is ready to hire employees, the owners will be prepared to track their time and pay them appropriately.

“It was a great, great experience,” says Mathur, who appreciated that he learned about many areas of business through the program.

The other education Along with all the work, the students had a little fun. They took advantage of their free time by attending two World Cup soccer games (“I know people complained about the vuvuzelas, but they were so much fun,” said Dunagan of the noisemakers), swam with sharks, toured Robben Island (where President Nelson Mandela was a prisoner for 18 years), and hiked Table Mountain. “It was a once in a lifetime experience,” said Dungan.

The introduction to South African culture made a large impact on the A&M students: each mentioned the desire to do business in the country in the future. Mathur and an EESA student from OSU are creating a business plan now that includes a South African component. He’s excited about the business, which involves automotive accessory manufacturing, and is excited about providing jobs in South Africa. “It’s a rapidly growing economy,” he says. “This experience has given me more confidence in starting my own business there.”

EESA students also took a little time to enjoy the festivities of the 2010 FIFA World Cup.

mays.tamu.edu 25

Former Student News

Marketing and ministry Founder of Breakaway Ministry, Matte ’92 uses business acumen to lead mega-church

While Greg Matte ’92 was at A&M earning his marketing degree, a tiny extracurricular activity he started led to shepherding 25,000 people in Houston.

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It’s impossible for him to have the close connection that he’d like to have with each of his congregants. Still, it’s the people T that make his job in ministry worthwhile.

“There’s nothing that can beat the greatness of seeing a changed life, when M B H I W with IM you see somebody reallyGconnect ’ W EK H E S U N YO Christ, when Jesus makesW HaEdifference in their life,” he says.

Seeing families restored, marriages saved, xt Step ke the Ne teens walking in the light — that’s why he Him, Ta m, Know Seek Hi does this work.

Matte’s recently published his first book, E AT T G M GREG Finding God’s Will, which focuses on the life T E MAT G G of Moses, and seeks to answer the question that GRE Matte says he is asked more than any other as a minister: “What is God’s will for my life?”

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“My business degree was tremendously helpful to me in starting Breakaway and even today as pastor, because it gave me the principles upon which to build a foundation for a lasting ministry to stand on.”

FIND

hile still a student at A&M, Gregg Matte ’92 created a start-up with his three roommates. Initially, they operated out of their apartment. Demand for their service quickly outgrew the facility as their number of on-campus clients climbed from 12 to 800 in three years. He learned on his feet how to manage a team of volunteers, how to advertise and how to maintain mission and identity in the face of rapid expansion.

Matte graduated but remained involved with the organization, eventually serving on the board of directors. Today, 20 years later, his start-up, Breakaway Ministries, touches approximately 10,000 Aggies each year. The multidenominational Tuesday night Bible study meets in Reed Arena, and sometimes Kyle Field, for an hour of student-led worship and study.

“It has bloomed into something of a spiritual tradition at A&M,” says Matte.

Matte had come to A&M to study marketing, but says it didn’t take him long to figure out ministry was his calling. While it wasn’t seminary, he discovered that the things he was learning in the classroom at A&M were vital to ministry. “My business degree was tremendously helpful to me in starting Breakaway and even today as pastor, because it gave me the principles upon which to build a foundation for a lasting ministry to stand on.” Staff, budgets, facilities, contracts—these are things that church leaders and business leaders alike must manage well. “The education I received at A&M prepared me to do ministry and to lead.”

After graduating from A&M, Matte attended Southwestern Baptist Seminary in Fort Worth, where he earned a master’s degree in religious education.

Today, Matte is the senior pastor of Houston’s First Baptist Church, where he shepherds a congregation of 25,000 members. To lead a church of that size requires a high degree of organization, especially since much of the work is accomplished by volunteers.

“There’s never enough time in the day,” he says. “With a church of this size I wish I had more time in the day to connect with people even more.”

Technology makes his ministry have an even larger impact. His church’s website is full of digital resources, such as podcasts of his sermons. He also blogs occasionally for The Houston Chronicle website, Chron.com.

“Doing ministry in this digital age is wonderful,” he says. “For a very low cost, you can go worldwide. It’s a communication tool people readily receive. We enjoy being on our computers, listening to podcasts. We want to surf the Internet and read blogs and emails on our phones.”

Matte says that the 2,000 people who watch Houston First Baptist live webcast each Sunday morning make up the second-largest service offered by the church. “We call it the pajama church, because you can sit in your pajamas and watch the service at your computer,” he explains.

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Former Student News

Fast-growing Aggie businesses honored at annual awards event

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he traits that set Aggies apart — excellence, integrity, leadership, loyalty, respect and selfless service — may have something to do with why Aggies are at the head of businesses around the world that are growing strong, despite a still-struggling economy. The sixth annual Aggie 100 event was held in fall 2010 to recognize these leaders, whose efforts create jobs and provide essential products and services.

The Aggie 100 recognizes the fastest-growing Aggie-owned or -operated businesses in the world, as gauged by the company’s compound annual growth rate over a two-year period. The Aggie 100 is hosted by the Center for New Ventures and Entrepreneurship at Mays and is open to all Aggies.

Claiming the top spot for 2010 was Tom Bieschke ‘95, chairman, president, CEO and founder of Caltex Energy Inc., a five-year-old oil and gas exploration and production company based in Calgary, Alberta, Canada. The compound growth rate for Caltex for the twoyear period was 224.07 percent.

Of the top 10 companies on the list, three are led by Mays graduates: David Baggett ’81, partner and founder of Houston consulting firm Opportune LLP, was fourth; Mitt Salvaggio ’82, president, owner and founder of Salvaggio, Teal & Associates, an information systems company in Austin, was eighth; and Russ D. Peterson Jr., managing director, owner and founder of iSpeak, Inc, a professional development training firm in Round Rock, was tenth.

Though he didn’t make the 2010 list, former two-time Aggie 100 honoree Greg Hall was recognized at the event for his part in the rescue of the trapped Chilean miners in October 2010. His Houstonbased company, Drillers Supply International, was responsible for developing and executing the “Plan B” solution that rescued the 33 men trapped half-a-mile underground for 69 days.

The theme for the 2010 Aggie 100 was “the company we keep.”

CNVE Executive Director Richard Lester, a clinical associate professor of management, told event attendees that with people like Hall in the line-up of past winners, being on the list puts them in good company.

In addition, dozens of Aggie 100 honorees guest lectured in classes across campus, sharing their success stories and life lessons with the next generation of entrepreneurs and business leaders.

Aggie 100 honorees give back in another vital way: each year, they provide funds for entrepreneurship scholarships at Mays.

Several scholarship recipients spoke at the luncheon, thanking their predecessors for making their education possible. One such student was Kelly Kravitz, who recently used an Aggie 100 scholarship to participate in the Empowering Entrepreneurship in South Africa program (see page 24 for story). She and three Mays students traveled to South Africa to work with small business owners, who are still struggling to find success in the country after apartheid.

“You are supporting entrepreneurship around the world,” Kravitz told the audience.

In addition to the Aggie 100 awards. The CNVE Excellence Award was given to Lenae Huebner, the former assistant director of the center who now works with a local start-up. Huebner was one of the originators of the Aggie 100 event, and organized the celebration for five years.

Top photo: Greg Hall (2nd from left), two-time Aggie 100 honoree, is all smiles after the rescue of the trapped Chilean miners. Bottom photo: 2010 Aggie 100 honorees gather for their group photo.

Now accepting nominations 5-27-11 Nominations close 7-1-11 Application deadline The Aggie 100 identifies, recognizes and celebrates the 100 fastest growing Aggie-owned or Aggie-led businesses in the world. The Aggie 100 not only celebrates their success, it also provides a forum to pass lessons to the next generation of Aggie entrepreneurs.

For more information: aggie100.com mays.tamu.edu 27

Former Student News

Outstanding Alumni They have fed the hungry, healed the hurting, and defended the innocent. We say “Gentlemen, well done.”

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here are many ways to measure success in business: wealth created, people influenced, new products developed. Mays Business School recently recognized three former students for their successes, which go far deeper than a credit and debit sheet could ever reveal.

John A. Van Alstyne ’66 (Lt. Gen. Ret.), director of the Mays Fellows program; Robert “Bob” Loeffler ’77, chief administrative officer of H-E-B; and Bruce Broussard ‘84, chairman and CEO of US Oncology, were celebrated for their lives of service to A&M, their businesses, and their communities. In recognition of their achievements, these men were given the highest honor at Mays, the Outstanding Alumni Award.

“Congratulations on a job well done, a life well lived, and an example well set. You are truly a role model to our students,” said Dean Strawser to the honorees at the banquet, held at the Miramont Country Club last fall. More than 100 people attended, including honoree family members, officials from Mays and A&M, past award recipients, and former students, and a few Ross Volunteers and Singing Cadets.

This was the 19th year for the event that recognizes business former students whose careers reflect the Aggie core values: loyalty, integrity, excellence, leadership, selfless service, and respect.

To read the full story, visit mays.bz/oaa2010

Former Mays dean Benton Cocanougher (r) shares a laugh with Brandon Coleman, Jr. ’78 and Coleman Chairholder Venky Shankar. Coleman is a 2005 Outstanding Alumni.

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John A. Van Alstyne ’66 (Lt. Gen. Ret.), Robert “Bob” Loeffler ’77, and Bruce Broussard ’84 at their evening of being honored as the newest Mays Outstanding Alumni.

A Singing Cadets quartet grace the proceedings with favorite Aggie songs.

Former Student News

Outstanding Doctoral Alumni In a culture that lauds the beautiful, wealthy, and entertaining, the work of scholars and educators too often goes unnoticed.

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o turn the spotlight on these worthy individuals, Mays Business School presented its annual Outstanding Doctoral Alumni award last November to two scholars whose work has significantly impacted thousands of students and the marketplace.

Sundar Bharadwaj, professor of marketing at Goizueta Business School, Emory University; and Sandy J. Wayne, professor of management at the College of Business Administration, University of Illinois at Chicago were honored last fall including a session with current doctoral students in a Q&A session about the recipients scholarly work and views on scholarly achievement.

This award honors doctoral graduates who have achieved significant distinction in their field and serve as role models for

Sandy J. Wayne, professor of management at the College of Business Administration, University of Illinois at Chicago enjoys the well wishes of Mike Hitt, Mays professor of management, and Wayne’s chair of her doctoral committee.

current students. Among the characteristics demonstrated by current and past recipients of this prestigious award are: sustained research productivity and visibility in the field; service to the profession as editor of a major scholarly journal; recipient of major awards for excellence in research, teaching and/or service; academic and administrative leadership as dean or associate dean of a business school; successful career progression at a peer or aspirant school; and holder of an endowed position.

To read about these exceptional scholars, visit mays.bz/oda2010

Sundar Bharadwaj, professor of marketing at Goizueta Business School, Emory University engages in conversation with a current Mays doctoral student.

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Donor Spotlight

Business of blessing What’s more fun than selling jewelry? Giving it away.

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reators of stunning, heirloom-quality items that sparkle, shine and elicit gasps and groans of admiration and envy, Julia and David Gardner ’78, owners of David Gardner’s Jewelers, are highly successful entrepreneurs.

Yet, they are the first to tell you that you don’t need their products, and they give away their inventory with as much enthusiasm as they sell it.

For luxury retailers, David and Julia are surprisingly down-to-earth and approachable. Both are highly visible at the store. Wearing his leather work-apron, David greets customers from his workshop at the center of the store. Julia, who heads their marketing initiatives, chats with college students, quizzing them about their preferences on latest trends. They have a hands-on approach to all aspects of the business, from design of the jewelry to relationship building with their customers, many of whom consider the Gardners extended family.

This creates a unique culture at DG. Jewelry is fun, insists Julia. You don’t buy it because you need it. You buy it because you like it. In the same way, they want employees and customers to have fun while in the store, to be there because they like it.

Jewelry stores can be intimidating.

People think they should dress up just to enter. Not so at their store.

Though it’s beautiful, with warm lighting refracting through antique display cases full of sparkling gold, silver, and precious stones, there is a homey feel. While browsing the merchandise, you can watch jewelers creating custom pieces, drink a cup of coffee in a ladies’ lounge area while admiring the latest styles, or sip something stronger in the guy’s room while watching football.

This obvious emphasis on the customer was forged during the economic crisis of the 80s when they feared they might lose their fledgling business. “We would have days that not one person would come in the

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store,” David recalled. That humbling experience led to the couple’s motto, “Every customer is a blessing.” This is still their heart, though those difficult days are past.

Now they are using the business to be a blessing.

The Gardners are very active philanthropically, giving on campus and in the community. Their aim is to “partner with an organization creatively, not just give money,” says Julia. They frequently donate valuable jewelry items for raffles supporting local charities that combat homelessness, hunger and illness in the Brazos Valley.

To celebrate DG’s 25th anniversary in 2008, they offered $25,000 in matching grants to the Bryan/ College Station community.

Charitable organizations

(Above) Julia and David Gardner ’78 (behind the Diamond Dash banner) enjoy the excitement of the couples scavenger-hunters who competed to find an engagement ring worth $15,000.

(Below) David Gardner’s Jewelers on University Drive during a fundraiser for a local nonprofit.

Donor Spotlight

submitted proposals illustrating how they would multiply and maximize its impact.

Their $25,000 contribution led to an $85,000 impact on the community, benefiting Head Start, Meals on Wheels, Aggie Guide Dogs and others.

They have similar involvement at A&M. They have given financially to the 12th Man Foundation and the Association of Former Students, and are the official jewelers of Aggie athletics. Their gift to Mays is much more personal. They have crafted a relationship with the marketing department’s Center for Retailing Studies to provide a unique learning opportunity for students.

DG is a sponsor company for the center, meaning they give annually to underwrite the programs offered. The Gardners frequently guest lecture in Mays classrooms, hire Mays students as interns and host events at their store for the Student Retailing Association, sharing their love of retail with the next generation.

They also developed a student advisory committee program that benefits both DG and the students. Monthly, a handpicked group of top marketing-minded students is invited to the store to discuss initiatives with the Gardners that might better connect DG to the campus community. In return, students peer behind the curtain to see how the Gardners operate and hear firsthand what works in retail.

“It’s a win for both of us,” says David, noting that the student involvement keeps DG fresh and fashion forward. Their strategy works. The store sees 8–10 times more business than comparable jewelry stores.

Their Aggie-aligned commitment to integrity has been recognized, as their business is among only 5 percent of jewelers, designers, appraisers and suppliers nationwide to be part of the elite American Gem Society. The hallmarks of the society include dedication to ethics, knowledge and consumer protection.

It isn’t surprising that David eventually became president of the organization. His commitment to integrity in his business, giving his best to customers, his employees and to the entire community, is the reason for his success.

To the Gardners, every link in the chain of their human network is precious. As David says, “We are thankful for every person that comes in the door.”

Beaumont Foundation of America honors Gary Reger ’73 through honors scholarships

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hen Gary Reger ’73 was asked to choose a school to receive a gift in his honor from the Beaumont Foundation of America, he didn’t think long about his answer. The resulting $1 million contribution from the foundation to Mays Business School will be matched to establish the $2 million Gary Neale Reger Endowed Scholarship Fund for top students majoring in business honors.

“We are so thankful that Mr. Reger chose Texas A&M and Mays to benefit from this gift,” said Dean Strawser. “By supporting our Business Honors Program, this gift will help educate outstanding young persons whose actions and accomplishments will provide similar benefits to others in the future.”

Reger is a lawyer in Beaumont, Texas, where he primarily handles commercial litigation. The Beaumont Foundation is a nonprofit grant-making institution dedicated to enriching the lives and enhancing the futures of less fortunate children and youth, families, and the elderly. The foundation provides grants and scholarships to a broad range of charitable, religious, and educational organizations across the United States.

“I am blessed to have good friends who sit on the board of the foundation,” said Reger, naming board members Wayne Reaud, Jon Huntsman, and Gilbert “Buddy” Low. “Wayne Reaud and the other board members have a strong commitment to education. They told me they wanted to honor me with one of their many educational scholarships, and together we chose A&M. It was the opportunity for me to give back in a meaningful way.”

“Supporting these students is very exciting to me,” he says. Reger plans to be involved with scholarship recipients in a mentoring capacity.

A&M is a family tradition for Reger, who has had several relatives join him in wearing maroon. To honor this legacy, the gift is dedicated to Reger’s parents, Doris and Ronald Reger ’48, whom Reger credits with his success. “My mother was the most rabid Aggie,” he says. “It was almost painful to watch football with her, she would get so excited.” Reger’s daughter Stephanie ’92 and sister Rhonda ’79 also are Aggies.

Reger and his wife, Joette, live in Beaumont and Austin. In addition to their support of A&M, they are also active with the Reaud Family Shelter, a hospitality house for the families of patients at Baptist Beaumont Hospital. Reger holds a degree in marketing from A&M and a law degree from the University of Texas.

SPOTLIGHT

The Business Student Council provides a day of fun for students each spring called Maysfest. The games and food are set-up between the Wehner Building and West Campus Library. Pizza rolls are always popular. mays.tamu.edu 31

Donor Spotlight

A parent’s pride Vanderhider endows chair in business

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roud Aggie parent Hallie Vanderhider says she will forever be grateful to Mays and the impact it has made on the life of her sons, Michael ’09 and Matthew ’09. That gratitude led her to make a gift of $500,000 to the school, which will be matched by school namesake Lowry Mays to create an endowed faculty chair in business.

Michael graduated in 2010 from the professional program and currently works for Deloitte and Touche (incidentally, the same firm where his mother began her career). He recently told Vanderhider than he felt “as prepared as anybody could be” for a career in accounting. He credits his success to the quality of the education he received at Mays.

Vanderhider, a graduate of UT-Austin, is president and COO of Black Stone Minerals, an oil and gas company headquartered in Houston. She says that while UT is a fine school, she believes that the experience Michael had at A&M is unparalleled at other universities. Attending A&M has made a major impact on her son’s life, says Vanderhider, who notes that the caring faculty, mentors and friends he found here have enabled his success.

“It changed his life in a way that I didn’t anticipate. It is wonderful to see your child succeed,” she says.

With that pride there is also a note of sadness. Michael’s twin, Matthew, studied business at Blinn College with the goal of getting into A&M after improving his grades.

“From day one he said, ‘I’m going to work hard and I’m going to get into A&M.’ And he did,” says Vanderhider. By his

sophomore year, his 3.7 GPA was enough to make his dream a reality. Unfortunately, he passed away a few days after receiving his acceptance letter. “He never was able to attend, but that acceptance was, I think, the happiest moment of his life.”

While Michael coped with the loss of his brother, people at Mays were there to help him get through the semester. “Everyone in the business school was so good to him,” says Vanderhider. “It was like a family.”

“I will forever be grateful,” she says. “This is just one small way that I can give back.” Vanderhider intends for this gift to be only the beginning of her involvement at Mays, as she has agreed to serve on the dean’s development council.

She wanted her financial gift to support faculty for the trickledown affect that it has. “The ability to attract and retain top faculty is what makes or breaks a school … It allows you to attract top students, because they know they are going to get a tremendous education and exposure to some of the brightest people in the country or around the world. In order for the school to maintain its standards and continue to grow, they need the opportunity to attract top talent.”

Dean Strawser agrees. “Hallie Vanderhider’s most generous gift will have a significant and lasting impact on Mays,” he said. “Our faculty play such an important role in developing our students for their careers and lives, and the ability to hire and retain the very best faculty is truly significant.”

Hallie Vanderhider interacts with Mays students during a recent visit to campus.

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Faculty Donor Research Spotlight

Increase incentives, decrease corporate pollution Family ownership, CEO bonuses influence corporate pollution reduction

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wo things can dramatically decrease the level of pollution likely to be created by a firm, says new research. No, it’s not complicated machinery for carbon sequestration, or more government regulation. It’s much simpler: family ownership and financial rewards.

New research suggests that firms where a single family owns at least five percent of the voting stock, pollution levels are much lower. Also, firms pollute less when the CEO is given long-term financial incentives for pollution control.

To come to these results, researchers analyzed toxic emission reports from the Environmental Protection Agency, examining the structure and actions of hundreds of companies.

When it comes to family ownership, researchers hypothesize that when a family’s image and reputation are at stake, there is a greater drive to be ecologically sound.

Institutional investors tend to have a more short-term view of the business, while family owners are more concerned with its overall quality and longevity, says Luis Gomez-Mejia, the Benton Cocanougher Chair in Business and Mays management professor, who has coauthored two studies on the topic of corporate pollution reduction.

Other research on family-owned firms and “socio-emotional wealth” dovetails with Gomez-Mejia’s: leaders of family-owned companies are more likely to derive a sense of identity from the firm, desire to be seen as generous and pro-social within a community, and strive to maintain group integrity within a community.

SPOTLIGHT

Business graduates who are named to the Aggie 100 are invited to breakfast in the Wehner Building that day.

These factors create a non-economic incentive for environmental efficacy, particularly if the family and the business are concentrated in one location, as the family usually cannot escape being the face of the business.

When firms are not family owned, Gomez-Mejia says corporate pollution reduction is still a matter of incentives; however, this time the incentive is financial rather than socio-emotional. “To the extent that the CEO is rewarded for investing in pollution control and also pollution prevention, the more likely it is that the firm will engage in those efforts,” he says.

Furthermore, the structure of the incentives matter: stock and option incentives are more effective than cash in pollution reduction. This is due to the long-term nature of both meaningful environmental policies and the interest-bearing securities. That is, continued pollution control leads to continued corporate wellbeing, which leads to continued growth of securities held by the CEO. Gomez-Mejia admits there is one limitation to the research: the EPA only requires emission reports for American companies and many of the corporations involved in the study are multinational.

“A remaining question is to what extent…the CEOs may have an incentive to move or shift the pollution elsewhere,” he says. He is planning a follow-up study to investigate this question, but notes that data collection is difficult, as pollution reporting in many developing countries is not accurate.

For more information, contact Gomez-Mejia at lgomez-mejia@mays. tamu.edu.

Point your smartphone here to see a short video of Gomez-Mejia discussing this research.

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Faculty Research

You say illegal, I say legitimate Entrepreneurs successful in the informal economy, despite legal status

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ootlegged concert recordings, undocumented immigrants building houses in the U.S., New York City street vendors selling designer knock-offs—these are examples of a largely unexamined economic activity, the “informal economy.”

These economic activities are considered illegal yet are still viewed as socially acceptable or legitimate by some substantial segment of society.

Because nearly nine percent of the GDP of the United States (and perhaps more than 60 percent in some African and South American countries) is involved in the informal economy, it is a topic worth exploring, says Duane Ireland, Distinguished Professor of Management and Conn Chair in New Ventures Leadership. He and two Mays colleagues, David Sirmon and Laszlo Tihanyi, and Justin Webb, a recent graduate of the Mays PhD program who is now at Oklahoma State University, have examined how the informal economy works and the reasons some ventures thrive, despite barriers of legality and legitimacy.

The cornerstone of their research is a matrix for categorizing entrepreneurial activities based upon legality and legitimacy.

While some entrepreneurial activities in the informal economy are considered illegal yet legitimate (e.g., the sale of counterfeit products or use of undocumented workers as labor to build a home), other entrepreneurial activities fit different classifications of legality and legitimacy. For example, tobacco-based and adult-oriented products in the United States are legal yet considered illegitimate by large societal groups.

In contrast, illegal drugs and human trafficking are considered illegitimate by the overarching society. Distinguishing among different classifications of legality and legitimacy is important to understanding the mechanisms through which these entrepreneurial activities are able to exist, grow, and be sustained even while occurring outside of the law.

Ireland says one aspect that he finds fascinating is how a business can move between categories over time, due to the intentional actions

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of the business or due to shifts in the definitions of legality and legitimacy. Take for instance, alcohol sales in the United States in the 1920s during prohibition. Though it was illegal, speakeasies and bootlegged liquor became quite commonplace and legitimate. Then in 1933, the industry once again was legalized. This is a great example of the fluid nature of the boundaries in this area.

In a similar vein, the production of marijuana is an example of the porous nature of the matrix, as it is moving from illegal and illegitimate in the United States to illegal but legitimate, or legal but illegitimate, depending on some groups’ norms, values, and beliefs and various state and local laws.

Another example is Napster and Youtube.com during initial operations. It was alleged that Napster allowed users to violate copyright laws by sharing audio files freely. The online service was hugely successful from 1999 to 2001 when it was shut down due to issues of legality. At least initially, similar allegations suggest that Youtube violated copyright laws by not removing items from its site that were posted by individuals who did not have permission from the owners of the postings. However, for some large groups and with an increasing expectation of free content on the Internet, Youtube is still seen as legitimate, despite the fact that some postings may not be legal with respect to copyright laws.

For more information, contact Ireland, Sirmon, or Tihanyi at direland@mays.tamu.edu, dsirmon@mays.tamu.edu, or ltihanyi@mays.tamu.edu.

Faculty Research

In the name of the company Organizational identification and desire to reciprocate can lead to criminal activity

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hen you hear of corporate scandals, you might assume that the perpetrators of the crime were acting out of self-interest—that they cooked the books or covered up information to get rich or move up the corporate ladder. But what if there was another motivation that has nothing to do with personal gain?

A recent study from Elizabeth Umphress, associate professor of management and Mays research fellow, looks at motivations for unethical behavior that benefits the corporation (called “unethical pro-organizational behavior,” or UPB) and how it may be tied to the degree of organizational identification the individual feels.

The researchers define UPB as activity that is not specified by formal job descriptions; is either illegal or morally unacceptable to the larger community; and includes acts of commission (e.g. cooking numbers to boost analyst projections and stock values) and omission (e.g., withholding information about the hazards of a pharmaceutical product).

In three studies Umphress and colleagues conducted, the results were consistent: there was not a direct relationship between organizational identification and UPB. However, there was a relationship between the two if a third element, positive reciprocity, was involved.

Findings indicate that if an individual feels a need to reciprocate when something has been done for them, and also strongly identifies

SPOTLIGHT

Mays Executive MBA participate experience residency week in College Station soaking in Aggie traditions including learning how to “hump it.”

with the organization, then they are more likely to commit UPB. Employees who strongly identify with their organization feel obligated to protect and maintain their membership in the organization.

They also find that people can be primed to commit UPBs—when they showed a test group a video that enhanced their feeling of organizational identification, they were more likely to agree to UPBs (if they scored highly on measures of positive reciprocity) than those who had seen an unrelated video.

Both organizational identification and positive reciprocity are good traits for an employee to possess, says Umphress. They can make an employee more diligent, productive and loyal. Managers need to be aware, however, that they can interact in this negative way. Umphress stressed that hiring decisions need not be made on this criteria, but that managers should be aware of the degree of these traits in their employees and understand that in the right circumstance “the employee might feel compelled or feel that it’s their duty to do something unethical…to help protect the organization.”

In previous literature, researchers have focused predominately not on unethical behavior that boosted the organization, but rather behavior that harms it, such as stealing or sabotage. This study is one of the first to examine this unique relationship.

For more information, contact Umphress at eumphress@mays.tam.edu.

Point your smartphone here to see a short video of Umphress discussing this research.

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Faculty Research

Manufacturers: Don’t skimp on marketing or R&D if you want to stay on top View as future investment

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ven during a time of recession and cutbacks, manufacturing firms must continue to invest in marketing and R&D if they want to remain successful, says a new study from Texas A&M University.

Researchers examined manufacturing firms on the Fortune 500 list for a period of 25 years, weighing a variety of firm and industry specific factors to arrive at their conclusion. They found that investing capital in both marketing and research and development have a direct positive effect on a manufacturing firm’s survival as a member of the elite Fortune 500 list— firms that account for nearly threefourths of the U.S. GDP. In fact, they found that if a Fortune 500 manufacturing firm were to incrementally spend one percent of its average sales revenues on marketing and another one percent on R&D for five years, that investment would reduce the firm’s risk of leaving the list by 27.8 percent.

This is significant, says researcher Venkatesh Shankar, Coleman Chair in Marketing at Mays, as “the firms that stay on the Fortune 500 list enjoy a lot of benefits,” such as lower cost of capital and increased reputation and brand equity. Fortune 500 firms also see increases in their share prices specifically associated with their entry into this list.

Alternately, a fall from the list can be a precursor to negative events, like bankruptcy and hostile takeover.

Using this investment strategy can “significantly decrease the

SPOTLIGHT

hazard of exiting the Fortune 500,” says Shankar. This strategy would also apply to companies that aspire to be on the list.

“These firms pour billions of dollars into R&D and marketing, yet no study has examined this important issue in depth,” say researchers. “The findings are important not just for marketers, but for senior executives in manufacturing, operations, innovation management, and top management as well.”

Not all firms benefit equally by the two areas of investment, however. Firms that are in high growth industries, such as technology, see a greater impact from marketing investment. Firms in slow growing or mature industries, such as cosmetics or packaged food, see greater returns from investment in R&D. Similarly, in any industry during periods of high growth, investing marketing capital is more effective and in times of low growth, investing R&D capital is more effective.

Shankar says that these findings broadcast an important message for managers: view marketing and R&D not as expenses, but rather long-term investments that need to be employed strategically in industries and periods of high and low growth. Many firms are cutting back in these areas to boost short-term profitability during a rocky economic period, he says. “And that can be very dangerous, because while…they may see immediate results, over the long run it could be detrimental.”

For more information contact Shankar and Varadarajan at vshankar@mays.tamu.edu and rvaradarajan@mays.tamu.edu.

Point your smartphone here to see a short video of Shankar discussing this research.

Welcome to the world of scholarly research. Bala Shetty, Mays executive associate dean, says “Howdy!” to the 2010 incoming doctoral students. Recent Mays PhD grads have joined the faculty at Wharton, Indiana, and Ohio State.

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ach August, veterans with a service connected disability who have been on active duty since 2001come to Texas A&M University to participate in the Entrepreneurship Bootcamp

for Veterans with Disabilities (EBV). Each of our disabled veterans is also interested in creating their own business. Our program is without cost to those who participate. However, like freedom, it isn’t free. Are you interested in participating with Mays Business School in providing this program to these wounded warriors?

Opportunities include: • Mentor a veteran • Attend the opening or closing ceremonies in a show of support • Encourage veterans who qualify to apply • Donate any amount. It takes approximately $5,000 to support each veteran that attends the program.

More information available at http://ebv.tamu.edu

Mays Business School 4113 TAMU College Station, TX 77843-4113

Entrepreneurship Bootcamp for Veterans with Disabilities Will you help a wounded warrior? (see inside back cover)