Page 1


Michael G. Foster school of business

University of washington

Spring 2009

A retrospective of the program that raised the bar for business education page 10 Investing for the Long Haul page 18

Financial Predictions page 26

People Person Howard Behar page 28

You already know the huge difference giving makes.

Why not think differently about what giving can look like? A bequest to the Foster School of Business allows you to have tremendous impact without making an outright gift today. From scholarships to research, curriculum advances to global study tours, your gift represents a meaningful legacy to the Foster School.


Cover story, page 10

EMBA TURNS 25 A retrospective of the program that has increased the caliber of business education at THE UW, graduated numerous notable leaders, and created lasting ties with the Northwest’s iconic companies

12 Upward Bound

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

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

17 Celebration of Leadership EMBA alumni who were recognized as outstanding leaders

17 They Started It

A sampling of EMBA entrepreneurs and the companies they have started

A look back at the start of the EMBA Program and the milestones that shaped it

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

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Finding Opportunity in Every Challenge Dean

James Jiambalvo Executive Director Marketing & Communications


Pamela McCoy Managing Editor

Renate Kroll Contributing Writers

Jocelyn Milici Ceder, Jean Choy, Steven Hatting, Ed Kromer, Andrew Krueger, Eric Nobis




4 In the News

Taking Shape, Executive Educators Unite, Shifting Standards, Foster Rising, Dubs Wants In, Global Domination, Clean Tech, Accounting Excellence, Mentoring Goes Organic, Managing Through the Downturn, The Future of News, Sector-blind Recession

18 Feature

Investing for the Long Haul

22 Faculty

Awarding Theory, Research Briefs, Market Driven, Hard Time, Financial Predictions, People Person

30 Students

Snapping the Globe: A photographic glimpse into the life-changing experiences of Foster students studying abroad

31 Alumni


Matt Hagen (principal), Paul Gibson, UW Photography Design

a.k.a. design Foster School of Business Marketing & Communications

University of Washington Box 353200 Seattle, WA 98195-3200 206.543.5102 206.221.7247 (fax) On the Web

Foster Business is published twice a year by the Foster School of Business at the University of Washington. The publication is made possible by donations from alumni and friends. No state funds are used in its production. Change of Address? Comments?

Economic upheaval. War. A winter that wouldn’t seem to end. There seems to be no shortage of daily afflictions. Those were some of the reasons that prompted NBC Nightly News anchor Brian Williams to ask his viewers to start submitting “good news” to feature on the program. He made the statement on March 4th and within days received thousands of supportive e-mails and phone calls. Obviously, an over abundance of good news runs the risk of being cloying and shouldn’t overshadow the reality of the day and the need for a diversity of stories. And yet, Williams’ query—and the public response it generated—is telling. In the midst of enormous challenges, it’s good to embrace our successes and remind ourselves that opportunities lie ahead. The challenges facing the Foster School loom large. As we work through 2009, the Foster School is making adjustments in anticipation of cuts of as much as $3 million to our annual budget. While we are faced with cuts in many areas, they will be done purposefully to maintain our core offerings and to prepare ourselves to be in the best possible position when things turn around. As I stated in a recent letter to donors, we have made too much progress and invested too much time, talent and energy into this school’s future to surrender our momentum now. Elements of that momentum are captured in success stories throughout this issue of Foster Business. • Foster School undergraduate and MBA teams are winning business competitions around the globe—from Bangkok to Montreal to Columbus (p. 6). • Our Department of Accounting was recently ranked first in contributions to the area of financial accounting research, topping institutions such as Stanford and Wharton (p. 7). And Professor Rob Palmatier, Evert McCabe Endowed Faculty Fellow, recently received the Journal of Marketing’s top honor for a paper on the topic of relationship marketing (p. 22). • The Foster School’s Global Business Center recently received high-praise from the editors of the Seattle Times for holding the annual Global Social Entrepreneurship Competition. They wrote of its “potential of doing so much good” (p. 36). • In November, we were ranked in BusinessWeek’s top tier of MBA programs and 9th among public schools. We also placed in the top ten in both curriculum innovation and program improvement. In April, U.S. News & World Report ranked the Foster full-time MBA Program 26th in the US and 8th among public institutions (p. 5). Economic recovery and public trust that brighter days lie ahead will take time, but can be achieved with commitment, conviction, and a thoughtful, forward-looking approach geared toward tomorrow’s playing field rather than what has worked in the past. That, by the way, is the approach we take at the Foster School. The Foster School exists to inspire and develop the next generation of management leadership. This year’s graduates are poised to contribute from day one on whatever career path awaits them. I’m certain that they, like Foster graduates past, will play a role in making a better tomorrow. Sincerely,

Think differently. Make a difference.

Marc Barros & Jason Green, Melissa Adams, Cindy Ryu, Top Secret Alumni News, Leadership Matters

36 First Person

Bigger Than Business


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James Jiambalvo Dean, Michael G. Foster School of Business Kirby L. Cramer Chair in Business Administration

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in the news Executive Educators Unite

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

Executive Education hosts the first UNICON Conference in the Pacific Northwest The International University Consortium for Executive Education (UNICON) is an organization of leading business schools with a commitment to executive education development. Established in 1972, it now has 90 members consisting of top business schools from around the world. Since joining the consortium, UW Executive Education has continued to help raise the visibility of Foster among other leading business schools. This increased visibility led the UNICON board to ask the Foster School to host the 2008 annual conference—the first time it would be held in the Northwest.

Taking Shape PACCAR Hall is on budget, on time, and online Despite the challenges of a long, inclement Seattle winter, construction of PACCAR Hall is progressing according to schedule. When completed in 2010, the new $95 million home of the Foster School of Business will encompass more than 135,000 square feet of state-ofthe-art classrooms, breakout rooms, offices, computer labs, community areas, a 250-seat auditorium, a café, and atrium. Can’t wait until PACCAR Hall opens its doors in fall of 2010? Go to the PACCAR Hall Web site to view a live construction cam, video clips explaining every step of the process, and a virtual video “fly-through” to get a stylized preview of the finished product. Visit n


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The conference was a tremendous success, attracting 175 executive education providers representing 70 schools from 18 different countries—one of the most diverse and well attended UNICON gatherings ever. The Foster School was able to showcase its new brand and provide a working case study for reputation building initiatives that include getting faculty and local corporate leaders integrated into the program. Conference feedback was overwhelmingly positive. n

Shifting Standards CFO Forum assesses the move to international financial reporting standards On March 4th, the Foster School hosted the Winter 2009 CFO Forum Meeting, convening more than 50 of Seattle’s top CFOs and senior financial executives and 25 business school faculty to discuss the impact of the transition from US to international financial reporting standards (IFRS) on American businesses. Three panelists led the discussion: Mary Barth, a member of the International Accounting Standards Board (IASB) and professor of accounting at Stanford University; Paul Munter, a lead partner in KPMG’s IFRS practice; and Sue Sallee, vice president and controller at T-Mobile. While Barth provided insight into the IASB’s standard setting process, Munter and Sallee shared their personal experiences with helping firms transition from US to international reporting standards. The audience asked panelists a variety of questions, including how the current credit crisis and the Obama Administration’s priorities are expected to impact the US transition to international standards. Audience members were also interested in how US firms that have already transitioned to IFRS are dealing with the revenue recognition and asset valuation differences these new standards bring. The CFO Forum sessions, which began in 2001, are sponsored by the Foster School, Cushman & Wakefield, KPMG, and Foster Pepper. The Foster School’s own Mark Soliman, associate professor of accounting and CFO Forum faculty director, served as the session’s panel moderator. n

In April, U.S. News & World Report ranked the Foster School of Business full-time MBA Program 26th in the United States, and 8th among public institutions. Earlier, the magazine listed the Foster School Undergraduate Program 21st in the nation overall, 9th in international business, and 12th in accounting. In February, BusinessWeek ranked the Foster School MBA Program 27th among American business schools, and 9th among public institutions. In addition, the magazine found the Foster MBA to have the 10th most innovative curriculum and to be the 10th most improved program overall, according to its poll of corporate recruiters. BusinessWeek also ranked the Foster Undergraduate Program 25th in the nation overall and 9th among US public universities. n

Let me in! Dubs, the new Husky mascot, peers into Balmer Hall.

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IN the news

Global Domination

Clean Tech

Foster students excel in business competitions around the world

Environmental Innovation Challenge inspires students to save the world

Deftly and definitively applying their studies to real-world problems, Foster MBAs and undergraduates are having a banner year in business competitions that measure them against students from the top universities in the world. Here are the highlights of some of this year’s Foster successes. Event: KeyBank-Ohio State University Minority

Case Competition (Cleveland, OH) Place: First

Event: Silicon Valley Regional Venture Capital Investment Competition (Santa Clara, CA)

Event: Ethical Leadership Case Competition (Waco, TX)

Event: Business Strategy Challenge (Washington, DC)

Place: First (Fourth at international final)

Place: Second

Place: First

Team: MBAs Lalitha Venkataraman, Read

Team: MBAs Ben Pierson (best Q&A),

Team: Undergraduates Ray Phua, Olivia

Maloney, Chris Coffman, and Ben Sadler; bioengineering doctoral student Brady Bernard

Craig Wiley (best presenter), Scott Greco, and Davey McHenry

Miasik, Stephanie Payne, and Rikki Johnson

Competition: Brigham Young, USC, UC-Irvine,

Competition: Babson, Baylor, Pepperdine,

UC-Santa Clara, and University of San Francisco

Clemson, Notre Dame, Florida, Clemson, and Texas A&M

The Foster Difference: Investing wisely in a

data-recovery software start-up and mitigating risk through a bullet-proof term sheet.

Team: Evening MBAs Bryan Tomlinson and

Rina Sarkar, full-time MBAs Hakim Jones (best Q&A) and Kathleen August (best presenter)

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

Competition: University of Chicago, Indiana

Place: Second

University, Ohio State, Yale, Carnegie Mellon, and 15 others The Foster Difference: Delivering the best

path to increasing KeyBank’s market share in the small business banking market.

Team: Full-time MBAs Martin Wilson and

Nathan Kolmodin and evening MBAs George Zhu and Megan Armstrong Competition: University of Chicago, University

of Virginia, UC-Berkeley, National University of Singapore, Yonsei University, Cheung Kong Graduate School of Business, and others from China and Korea The Foster Difference: Devising a compelling

localized mobile service that supports a Microsoft initiative to inspire young people to create technology innovations that make a difference in the world.

Competition: Georgetown, USC, NYU, Northwestern, and Carnegie Mellon The Foster Difference: Advising United Way

to weather the economic crisis by partnering with healthy kindred organizations for the short term and by reorganizing to influence legislation for the long term.

The Foster Difference: Recommending that

General Electric approach corporate social responsibility as a strategic issue that can create a competitive advantage, rather than a laundry list of “do-good” projects.

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

Event: Thammasat Undergraduate Business Challenge (Bangkok, Thailand)

Place: First

Place: First

Derrick Nation, Eric Appesland, and Susan Dugal (best presenter)

Team: Undergraduates Vanessa Lopez,

Team: Undergraduates Eric Appesland, Alex-

andra Berg, Nathan Ill, and Jennifer DeWhitt Science and Technology, McGill University, UT-Austin, and other top universities in Asia, Europe, and North America

Competition: Nanyang Technological University, Singapore Management University and 18 others from Canada, China, Hungary, Ireland, the Netherlands, New Zealand, Portugal, Singapore, and the US

The Foster Difference: Creating the most

The Foster Difference: Navigating three

viable strategy for Thailand-based Foamtech to become the leader in its industry through exhaustive analysis of the competition and emerging markets.

lightning rounds and delivering a final case plan to move Montreal’s shipping facilities to a new site and reshape the city’s Old Port for tourism.

Event: Champions Trophy International Business Case Competition (Auckland, New Zealand)

Event: CIBER Case Challenge (Columbus, OH)

Place: Second

Lopez, Yutong Yi, and Connor Bogin

Competition: Hong Kong University of

Place: Second Team: Undergraduates Susan Dugal, Vanessa

Team: Undergraduates Jennifer DeWhitt,

Competition: Singapore Management University, Concordia University (Canada), Audencia Nantes (France), University of North Carolina, UT-Austin, USC, and many others

Brad Geddes, Lejla Sudar, and Ben Wood


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The Foster Difference: Presenting the most

compelling solutions to a range of cases regarding large publicly held companies, small businesses, and not-for-profits.

The Foster Difference: Determining the best

way to expand Limited Brands internationally with a specific focus on Bath & Body Works. n ©

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

Competition: International case competition champions in the past year, including Singapore Management University, UC-Berkeley, Copenhagen Business School, Hong Kong University of Science and Technology, and National University of Singapore

Call it an “environmental stimulus” plan. The inaugural University of Washington Environmental Innovation Challenge in April sparked 18 student teams from around the UW and several nearby universities to develop pioneering methods, designs, and products that provide innovative—and potentially profitable—solutions to environmental challenges. Entries ranged from environmentally friendly vending machines to algae-based fuels to wind power to water desalination. But after a long day weighing clean technology plans and prototypes, the judges awarded the $10,000 UW TechTransfer Grand Prize to HydroSense, a collaboration of UW engineering students developing a real-time monitor of household water consumption. The $5,000 Davis Wright Tremaine Second Prize went to Nanocel, a liquid-based laptop computer cooling technology developed for commercialization by Foster MBA Daniel Rossi and mechanical engineering PhD Dustin Miller. And $2,500 Honorable Mention awards—sponsored by Perkins Coie, the Washington Technology Industry Alliance and Teledyne—went to Wind2O, producer of potable water using wind energy, Ecowell, vending machines that refill drinking containers, and InTheWorks, reducing boat engine emissions. The Center for Innovation and Entrepreneurship developed the Environmental Innovation Challenge, with the support of the Foster School, UW Applied Physics Lab, College of Engineering, and College of the Environment. n

Accounting Excellence Foster Accounting faculty ranks first worldwide in research contributions According to a new study from a team of researchers at Brigham Young University, the Foster School Department of Accounting ranks first among all major business schools in contributions to the area of financial accounting research. The study ranks accounting programs from around the world by topical area based on the number of articles published in top journals over periods of 19, 12, and six years. Topical areas include managerial, tax, and financial accounting, information systems, and auditing. Financial accounting is the area of study pursued by the largest number of accounting researchers. The Foster Department of Accounting topped the 19-year measurement, followed by Stanford University Graduate School of Business, the Wharton School at the University of Pennsylvania, the McCombs School of Business at the University of Texas at Austin, and the University of North Carolina’s Kenan-Flagler Business School. The Foster School ranked second and first respectively for the 12-year and six-year periods. n

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IN the news

Mentoring Goes Organic MBA Mentor Program Director Susan Canfield has written the book on modern mentoring

“The art of facilitating the professional and personal development of another.” This definition of “mentoring,” as provided by Susan Canfield, director of the MBA Mentor Program at the Foster School, also serves as the thematic glue of Mentoring Moments, her recently published book (January 2009). In it, she captures eight mentor/mentee relationships across

divergent industries, company sizes and personalities. Why, amidst a busy career, did she take the time to write this book? “Because every encounter holds promise,” cites Canfield. “Mentoring happens in many different ways, but in my experience all mentors have one thing in common: a generosity of spirit. I want to promote mentorship in the business world, encourage business schools in their mentorship programs, and prevent others from missing the chance to truly learn from remarkable people they encounter in their work.” Not only does Mentoring Moments meaningfully delve into the ways in which mentoring can be transformative for both mentor and mentee, it also serves as a map toward changing trends in the way mentoring happens today. For example:

Traditional view of mentoring: • You are either a mentor or a mentee • A mentor must be more senior than the mentee • The mentor structures and drives the relationship • Mentoring is a formal relationship Evolving view of mentoring: • You are both mentor and mentee at the same time • A mentor is anyone from whom you can learn • The mentee drives the relationship • Mentoring is often organic and may be based solely on observation For more information on Mentoring Moments, including excerpts, go to n

managing through the downturn

The Future of NEWS Fostering Innovation speaker looks to the world after print Is there a future for newspapers? No. In fact, there isn’t even a present. The question was posed by former Q13 Fox News anchor Christine Chen. The answer came from Mike Davidson (BA 1997), CEO and co-creator of Newsvine, the Seattle-based online news media company. The exchange was part of an insightful 45-minute dialogue hosted by the Foster School on April 7 as part of its Fostering Innovation lunch series. The topic of the day was news in the internet era, a timely focus in Seattle and around the nation as dozens of metropolitan daily newspapers have ceased operation while the general public has increased its use of online “news snacking.”

Davidson has firsthand knowledge. As CEO of Newsvine, he is responsible for the day-to-day operations of as well as community integration efforts between Newsvine and parent company MSNBC. Newsvine assembles stories from numerous worldwide sources including the Associated Press, The New York Times, and the BBC, allowing users to edit articles for individual use, and even to write their own content for the site. In addition to discussing the fate of newspapers, Chen and Davidson’s conversation included issues ranging from the proliferation of bloggers to the myopia that can result from overreliance on RSS feeds as a source for daily news. Interested in viewing the conversation? A video is available at n

Sector-blind Recession

Expert panel explores what it takes to lead a company through an economic downturn “Managing is always a challenge in a global business environment, and when you’re faced with managing in a financial crisis that is the worst since the Great Depression, the challenge becomes exponentially difficult,” said Dean James Jiambalvo in his opening remarks for the Foster School public forum, Managing Through the Downturn. Hosted by the Foster School on April 17th, the discussion was attended by hundreds of students, faculty, and alumni. They came to hear the remarks of a panel of business experts that included Karen Bartlett, executive vice president for operations, Premera Blue Cross; Martin Coles, president, Starbucks Coffee International; Jack LeVier, senior vice president for human resources, PACCAR Inc; and Girish Nair, partner, McKinsey & Company. The dialogue was moderated by Foster strategy professor Charles Hill. Hill began the evening with a question that directed much of the conversation: “What should a business do to survive the downturn with core assets intact, but also position itself to prosper when the upturn comes?” The panel responded unanimously about the need to invest


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in human capital—retaining the best employees and investing in them. Each of the panelists expanded on this need by urging managers to be transparent with employees through ongoing communication. The panel also cautioned managers to avoid the “bunker mentality” of focusing on the short term and instead think strategically about a range of possible outcomes and opportunities for investment. The opportunities, however, were varied. A few of the panelists addressed the opportunity to look at productivity and cost control. The business strategies of “Lean” and “Six Sigma” were addressed at length. Another idea was offered by Nair based on evaluation of industry “leaders and laggers” from previous recessions. He said that regardless of the position held at the outset of a recession, the leaders that emerged had consistently invested in sales and marketing efforts. n

BEDC study finds that minority-owned businesses, once a growth sector, are feeling the downturn too The Business and Economic Development Center (BEDC) at the Foster School publishes the results of the semi-annual Washington Minority Small Business Survey to provide business leaders and policy makers with critical and timely information about the state of minority-owned businesses in Washington. This level of research and reporting is precedent-setting at a national level, and is the only effort of its kind in Washington State. “The minority business survey is one example of how we pair rigor and relevance at the business school,” said BEDC director Michael Verchot. “We’ve established two key indices: the Minority Small Business

Confidence Index, and the Recent Performance Index, both of which are supported by rigorous data collection and analysis.” BEDC’s recently released Economic Crisis Report gives a window into how the current downturn is affecting minority-owned small businesses across Washington. Some findings include: • The Minority Small Business Confidence Index, which measures owners’ perceptions of the future business climate, dropped from 55 (out of 100) in April 2008 to 49 in November 2008. • The latest edition of the Recent Performance Index, which tracks sales and profits by quarter and year, declined

from 56 to 54 (April 2008 to November 2008). Both scores represent the lowest levels since the report was launched in March 2007. • Unmet financial needs rose by 50 percent between April and November 2008 with 19 percent of minority-owned businesses and 16 percent of white-owned businesses not getting the financing they need compared with only 6 percent nationally. For more information about this research and other efforts driven by BEDC, go to n

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A retrospective of the program that has increased the caliber of business education at the UW, graduated numerous notable leaders, and created lasting ties with the Northwest’s iconic companies


EMBA Turns

charter Class, 1984

Since its inception in 1984, the Executive MBA (EMBA) Program has helped the Foster School of Business define what it means to provide true excellence in management education. Preparing a curriculum—and overall program experience—rigorous enough to challenge seasoned businesspeople, and relevant to executives in the throes of diverse business demands, is like refining gold from 18 to 24 karats. As Foster School Dean James Jiambalvo puts it, “Our EMBA Program is a prime reason that the quality of our business education is so high.” In celebration of 25 years of the EMBA, we’ve caught up with charter class member Scott Carson, interviewed the program’s first director, and noted some milestones and “greatest hits” of the program’s successful quarter century. See how the EMBA has changed the landscape of business education. Some folks will even tell you that the EMBA is the new MBA.

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Upward Bound Boeing Commercial Airplanes CEO Scott Carson’s career took off after graduating with the charter class of the Foster EMBA Program Scott Carson (EMBA 1986) may have been destined to work for the Boeing Company. But his eventual ascent to president and CEO of Boeing Commercial Airplanes—a vast organization responsible for three-quarters of the world’s jetliners—would require some timely interventions. The son of a Boeing test pilot, Carson was fascinated from birth by fast-moving vehicles of every stripe. He rebuilt his first airplane and learned to fly before graduating from high school, served in Vietnam on an aircraft maintenance crew, and got his start at Boeing as a technician. Rather than begin his rise through the aerospace giant’s echelons, he soon fell victim to the company’s massive 1970 layoff. Carson’s rebound plan was to pick up his commercial pilot’s license. But some influential people in his life took a longer view. “I had an uncle I was close to who told me if you spent a little effort upfront, it would make a huge difference later in life,” he recalls. “Then I met my wife and she reinforced that message.” With a college degree a condition of marriage, Carson earned his BA in business administration from Washington State University. And after a brief stint selling Safeco Insurance, he found himself back at Boeing—this time as a financial analyst for the B-1 Bomber avionics program. He progressed to management in 1976. Think globally, study locally In the early 1980s, Boeing was sending its most promising young managers to MIT’s Sloan School of Management for executive development. But there were only a handful of slots, and a long backlog of prospects. Carson was wait-listed three times before being offered a slot in the brand new Executive MBA Program at the University of Washington.

The Boeing tour In the years after earning his Foster EMBA, Carson piloted many initiatives around the Boeing organization. He served as deputy program manager on the international space station project, then led a series of entrepreneurial start-ups within the company, including a satellite cell phone network, an agricultural monitoring system, and a data distribution platform. In 1997, he became executive vice president of business resources for the former Information, Space and Defense Systems. In 1998, he was named CFO of Commercial Airplanes, by which time the full benefit of his Foster EMBA-infused thinking was coming into focus.

787 Interior

Scott Carson, President and CEO, Boeing Commercial Airplanes

© Boeing images

787 Dreamliner

The schedule would certainly suit his pregnant wife and four children, Carson realized. He decided to give it a go. “The format worked really well,” he says, “and it turned out to be a great experience.” Version 1.0 of the Foster EMBA was somewhat experimental. But it packed plenty of value for its pioneering students. Carson recalls the indelible lessons imparted by some of the legendary professors of the Foster School of Business—including Kasi Ramanathan, Alan Hess, Rocky Higgins, and the late Bill Alberts, many of whom became good friends. He also built a lasting network of colleagues who have left their mark on the Seattle business landscape in a variety of industries, people like Mason Sizemore, retired president and COO of the Seattle Times, Roger Neale of REI and Lifetime Learning Center, Ken Higgins of Boeing, and Jim Bloomer of Summation and L.W. Foote Company. “Maybe the biggest difference the program made was introducing me to a group of friends with a whole different perspective on life,” Carson says. “It’s a great value to have friends like these who are outside of your industry but can give good advice.”

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

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Carson’s training in what he calls “value management” became an invaluable resource as Boeing embraced this strategy in the late-90s, just as he was moving into chief financial roles. “This notion of structuring an enterprise around maximizing shareholder value came into vogue in our company easily 15 years after I’d finished the EMBA Program,” Carson says. “Being well versed in this already really made a difference.” His strategic sensibilities and malleable management skills didn’t hurt, either. Carson’s career took a major shift in 2000. Overnight he switched from leading the finances and operations of a massive manufacturing and sales unit to running a tiny internal start-up called Connexion by Boeing. Connexion was developing high-speed, in-flight Internet access, perhaps a few years ahead of its time. “But it was just about as exciting an opportunity as you could imagine,” Carson says. “Everyone involved learned volumes about what is possible.” Commercial break Learning what’s possible was a message that was sorely needed back in the beleaguered Commercial Airplanes division when Carson was named vice president of sales in December 2004. He inherited a sales force whose confidence had been rattled by several consecutive years of losing market share to archrival Airbus and its seemingly invincible master talisalesman, John Leahy. But Carson, despite a marked lack of expertise in sales, came to the party spoiling for a fight. “At our annual sales meeting, one fellow asked, ‘How can we compete with these guys? They have Leahy,’” recalls Carson. “I replied, ‘But you have me.’” It turned into a rallying point. Sparked by Carson’s scrappy attitude and empowering strategy—and a rapidly recovering market—Boeing not only bested Airbus, it did so in historic fashion. After selling just 272 airplanes in 2004, Carson’s sales team sold 1,002 airplanes in 2005, 1,040 in 2006, and 1,400 in 2007 to create what is today a backlog of nearly a quarter of a trillion dollars in sales.

Jan Monti

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Louise Kapustka

Many of those sales were for the 787 Dreamliner, Boeing’s celebrated new aircraft which is out to revolutionize the industry, from design to manufacture to in-flight experience. In September 2006, with the sales team on a roll, Carson was named president and CEO of Boeing Commercial Airplanes. After a career-long build-up, he took the controls of this new direction in commercial aviation. Changing the way we fly The Dreamliner is being developed in a fundamentally new way. It is fabricated of light, resilient carbon fiber composite to dramatically lower operating and maintenance costs. It is being engineered for enhanced flying experience, with vaulted cabins, appealing light, healthier air, wireless electronics, and advanced turbulence-quelling technologies. It is being developed in symphony with a complex global collaboration of risk-sharing partners. Carson has brought to bear his entire portfolio of expertise and experience to conduct this breakthrough introduction of the 787 while leading a sprawling organization of 60,000 employees and thousands of providers and partners through a global economic crisis, producing an existing fleet of airliners for eager customers around the world, and keeping an eye on future threats and opportunities—most notably maximizing fuel efficiency and neutralizing carbon dioxide emissions. He’s worked through labor disputes and production delays of this experimental endeavor. But Carson believes the end result will change everything in commercial aviation. Again. “The Boeing 707—America’s first commercial jetliner—was special because it initiated the romantic notion of the jet-setter. But flying, over the years, has become less special. It has lost a bit of that magic of first looking out that cabin window at the earth passing beneath you at 180 miles per hour,” Carson says. “The 787 will restore the experience of commercial flight to something truly special. It’s a logical extension for our industry, and it’s exciting that the Dreamliner is the product that will lead the way to this new era.”

Rocky Higgins

Bob Bowen

Building more than planes Carson knows the significance of his company and his office. While in the EMBA Program 25 years ago, he and his study cohort wrote a statistics paper that found a significant historical correlation between the economic cycles of Boeing and the nation. “We couldn’t necessarily identify which was the leading factor and which was lagging. But it really drove home how significant Boeing’s impact is, not only on Seattle and the region, but also the state and the country. And now the world,” Carson says. “We’re still the nation’s largest exporter, and we draw so many resources to support our business from all over the world. So if we allow ourselves to go through a major down cycle, we affect China, Japan, Russia, Europe, countless suppliers here at home. That’s an awesome responsibility so you want to get it right.” Carson’s life-long engagement with Boeing continues with his commitment to educating the next generation of leaders. He knows first-hand the value in a timely intervention of leadership and strategy development during key stages of a career. “I’m a big believer that education never stops, and I have used the Foster EMBA Program in particular as a place to send people who are clearly bright in a specialized area,” he says. “For them, I suspect the program makes an even greater impact than it did on me. It allows them to think about problem resolution in a multidimensional way, which is so important in a technology-driven company like ours. There are always good technical reasons for a decision, but when you have to blend that with a business outcome, it really makes a difference.” n

then and now It all started with missing furniture, an inauspicious beginning for a program with “executive” in its title. It was 1984, and Jan Monti, EMBA’s first program director, searched Balmer Hall in hopes of solving the mystery of brand new chairs gone missing from the newly renovated executive classroom. Her search was leant urgency by the fact that the first EMBA class was going to arrive the following day. It turns out that several faculty members, other program directors, and internal finance people had reappropriated some of the new chairs because their own furnishings were in disrepair and the new stuff was pretty nice. Why should these shiny new chairs be corralled into a single classroom? Perhaps that anecdote is telling with regard to the power of introducing executives into a graduate business program. While the average MBA student is anything but average—the Foster MBA program draws top students from around the world—an executive MBA student is likely to be a mid-career professional with lots of time logged in the trenches. Teaching this kind of student requires a different approach, a modified curriculum, and the ability to teach business cases practically ripped from the headlines. Available chairs are also helpful. Presumably, incoming classes of students have no idea what it took to build the program that is one of the best-in-class programs in the country. That is proof of its successful evolution. “We tested everything,” recalls Jan Monti. “Food selection, spouse ‘support’ groups, sponsor events, resident weeks, curriculum…we were very intentional from the outset. The experience we wanted to create was high profile, highly personal, and highly professional.” It worked. Susie Hasty, a 2007 EMBA graduate on the “orange team” (EMBA classes are broken into study groups given color designations), said it best when she declared, “the ‘E’ should stand for ‘experience’…unlike any other academic experience you may have had in the past or will have in the future.” It starts with the classroom experience created by faculty, of which the

Business Plan Competition

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inaugural class boasted the likes of Bob Bowen, Bill Alberts, Ted Klastorin, Rocky Higgins, and Kasi Ramanathan. Faculty support and excitement from the visionary days is very much alive and well today. Then there’s the cohort. In demographical usage, “cohort” signifies a group of persons having similar statistical characteristics. In academia, it means “colleagues” and has connotations of strength and unity of purpose aptly descriptive of an EMBA class. Ask anyone involved with the EMBA what stands out at Foster, and as Monti recalls from her very first moments launching the program, they’ll likely say, “It’s all about the cohort.” Louise Kapustka (EMBA 1995), the current EMBA program director, says the same thing. “I don’t think a lot of prospective students realize how close they’ll become to their study groups and classmates,” she says. “You get to a point in your career where you’re nostalgic for the kind of collegiality you had as an undergraduate—we created our EMBA around a format that recreates a lot of that experience, and it’s always gratifying to watch an incoming class bond.” As the EMBA Program has matured, several notable features have been added. The first large-scale innovation happened in 1997 with the launch of EMBA’s North America Program. The North America (monthly) class appeals to people who: live or work outside of greater Seattle; travel frequently but live in the Puget Sound area; or prefer a concentrated class meeting time commitment. Arriving from as far away as New York and Alaska or as close as Bellevue and Belltown, students in the North America class spend three or four consecutive intense days together each month (housing is provided near the UW campus). Many students, especially those who live in Seattle, also appreciate this format because it takes them away from day-to-day responsibilities and distractions, allowing them to focus on their classes. In 2001, international study seminars were introduced, with trips to Seoul and Tokyo. The study seminars give students a chance to connect their learning with on-site visits to international businesses. There have been trips every year since the inception of the study seminars, from Grenoble to Beijing, Prague to Hyderabad.

In 2004, the EMBA Program saw the introduction of a business plan competition. Suresh Kotha, professor of management and faculty director of the Center for Innovation and Entrepreneurship, introduced the competition as a capstone project for EMBA students. “The idea was to apply entrepreneurial and strategic thinking across different graduate programs,” explains Kotha. “We designed the business plan competition as a creative and fun exercise that provides students an opportunity to apply the different skills and concepts acquired in the various classes. Students are required to come up with a business opportunity, write a solid business plan, and then defend it in front of expert judges drawn from the Seattle community.” But it was more than that. Kotha and others over the past five years have reached out to Foster School EMBA graduates to participate as judges in the competition, thus completing the cycle of knowledge and strengthening the important network between EMBA alumni and students. Coming full circle to one of the faculty who really got the EMBA Program off the ground, this year Foster has unveiled the William W. Alberts Executive MBA Scholarship Fund. Alberts was a professor of business economics and finance from 1967 until 1995. Prior to joining the Foster faculty, he taught for several years at the University of Chicago (where he completed his undergraduate, MBA and PhD work). He was instrumental in the creation of the UW EMBA Program and served as faculty director for many years. Kapustka recalls, “Those of us fortunate enough to have been in Bill’s classroom will fondly recall his iconic eyewear, 3-piece suits, clouds of chalk dust, and his delight and infectious enthusiasm for both students and economics.” Reflecting Alberts’ vision of supplementing a rigorous curriculum with the engaging, interactive classroom discussions of a broad and diverse student cohort, the fund launched in his name will reduce a financial barrier for potential students, usually from non-profit organizations that cannot afford to send executives to the EMBA Program. n

Celebration of Leadership

They Started It… EMBA Entrepreneurs

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

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

Peter Adkison Founder, Wizards of the Coast

Kevin Conroy President & Founder, Blue Rooster Marketing LLC

Dorothy Bullitt Habitat for Humanity

Steven Dimmer Co-founder, Innovative Pulmonary Solutions

Phyllis Campbell Chairman, Pacific Northwest, JP Morgan Chase

Cody George Co-founder, Vintage Hill Cellars

Scott Carson President & CEO, Boeing Commercial Airplanes

Larisa Goldin President and Founder, Dreamclinic

Mic Dinsmore Former CEO, Port of Seattle

Ken Hey CEO, Sunstream Corporation

Michael Fancher Former Executive Editor, The Seattle Times

Nimrod Hoofien CEO, Six Slice Studios

Ken Hey CEO, Sunstream Corporation

Brian Johnson Co-founder, StickyDrive

Alice Ray President & CEO, Ripple Effects

Santosh Khare CEO, GOLS

Dennis Weston Senior Managing Partner, Fluke Venture Partners

Stephen Quinn CEO, Ratner BioMedical Group LLC Charlie Robbins CEO, Sea to Ski Properties Vetri Vetrivelkumaran CEO, Chronus Jeri Wait Founder, OrcaWave LLC Paul Weinstein President & General Manager, Tenfold Organic Textiles LLC


1984 EMBA Program founded

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1997 North America Program launched

2001 International Study Seminars started (Spring Qtr)

2004 Business Plan Competition launched

2007 UW Business School becomes Foster School of Business

2009 Bill Alberts Scholarship launched

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Investment is a Positive Sum Game A common metaphor used for investing is sports; another one is gambling. In each of these activities, the total at stake is fixed and when one party wins, another loses. Mathematicians call this a zero-sum game. The mind set and competitiveness created by a zero-sum game attitude pervades many aspects of business. It can be a destructive force and it often inhibits successful investing. If we must use a sports metaphor, I much prefer my young grandchildren’s soccer games: everybody wins. In the late eighteenth century an Englishman, Reverend Thomas Malthus, looked back in history and propounded a theory that, on average, no human being could progress materially because every technical improvement would be met by a corresponding increase in population. Consequently, life was a zero-sum game. In order for one person to improve his lot in life, another had to have his lot reduced. And, looking back at history until about 1800, that had been the case. The average per capita income of human beings the world over had remained about the same for all of recorded history. Now here was one unlucky guy. His reasoning was inductive based on previous human history. What were the odds that at the very time that Reverend Malthus was propounding his theory, the world was turning toward a non-zero sum game in the form of the Industrial Revolution? It’s what the hotshots on Wall Street would call a “six sigma event,” i.e., such a small chance of happening that an investor can ignore this risk. The critical point to make about the still ongoing Industrial Revolution is that, starting in England and then spreading to other parts of the world, people began to increase the production of goods and services on a per capita basis. Starting about 1800 and continuing through today, the material wealth of the world is increasing faster than the growth of the population. A graph of average annual income per person in the world from the dawn of history to the present would look pretty close to the following:

Investing for the Long Haul Ideas from 40 bumpy years in the investing game ow many times over the course of his or her career does an executive, investor or entrepreneur wish that there were breadcrumbs of business wisdom to follow through the forest of hard knock lessons? Mike Garvey would have appreciated having a seasoned veteran to mentor him along the way, as he primarily “lived by his wits and learned things the hard way.” Garvey is now retired from Saltchuk Resources’ day-today operations, and the holding company he co-founded in 1982 is in the hands of family. Perhaps because so much of Saltchuk’s business is in maritime shipping, and certainly because of his generous spirit, Mike has drafted some charts for navigating the shoals of business—in the form of a 75-page manuscript he plans to publish for Saltchuk’s employees. He’s called it, Forty Bumpy Years at the Investing Game. The sub-title is telling with regard to how he foresees the information can best be used: A Framework for Thinking about Saltchuk Investment Policies in a Family Business. Within its pages Garvey dissects: 1) Factors affecting the investment environment, 2) The attitude of the investor, and 3) Structuring an investment policy. He has kindly allowed us to excerpt material from all three sections for this article. In the introduction, Garvey offers a brief caveat: “While I make the argument in this essay that heuristic learning is the critical base knowledge that the investor must acquire, academic studies on how markets work have been very helpful to me.” This juxtaposition of bookish knowledge with on-the-job learning is a recurring theme, so much so that he questions the transferability of trial-and-error knowledge.

But Garvey’s humility and philosophical reluctance to make too much of his learning does nothing to diminish its value to the reader. As he aptly points out, in the face of how much is still largely unknown about the nature of successful investing, “there is no intellectual discipline of any consequence where the body of known knowledge about the discipline is greater than the body of unknown knowledge.” The Foster School is very lucky to have the benefit of Garvey’s wisdom; he’s been on the dean’s Advisory Board for a dozen years now. He was also a co-chair of the school’s record-setting capital campaign. And while he didn’t graduate from the business school (he’s a dual degree holder—BA Mathematics, JD Law—from UW) he taught business classes for seven years in the late ‘60s and early ‘70s. He went on to found a successful law firm, Garvey, Schubert & Barer, a thriving company, Saltchuk, and still makes time to be a stalwart of community service. Mike Garvey is a man from whom one can learn volumes, and if he began his manuscript—which could be the first of more to come—to “provide a common approach” for the stakeholders at Saltchuk, he has inadvertently created a guide that bears relevance well beyond his company’s walls. Below are excerpts from three sections of Garvey’s treatise. The first deals with the idea that investment creates wealth for individuals besides the buyer. The second section notes the importance of humility as a character trait of a successful long-term investor, and the final section lays out some rules of thumb gleaned from 40 bumpy years in the investing game.

World Per Capita GDP 10000 BCE – 2003 CE (1990 International Dollars) Brad DeLong

Angus Maddison

$7,000 $6,000 Per Capita GDP


$5,000 $4,000 $3,000 $2,000 $1,000 $0






































Source: J. Bradford DeLong, “Estimating World GDP, One Million B.C.- Present” Draft/World_GDP/Estimating_World_GDP.html. Accessed Mar 5, 2008; Angus Maddison. “Contours of the World Economy, 1-2030 AD: Essays in Macro-Economic History.” New York: Oxford University Press, 2007. 382. ©2008, Michael W. Kruse

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The economic history of the United States provides an example. Roughly, the country’s income has grown by an average of 3 percent per year since its inception. About one-half of the growth in income is due to the increasing number of workers and one-half to increasing productivity. I was born in 1938 and in two years will be 72 years old. Using the rule of thumb (divide 72 by the growth rate to determine how long it takes to double), the wealth of the country doubled by the time I was 24 years old, doubled again by my 48th birthday, and will double again by age 72—an eight-fold increase from my birth year. The above example was calculated in real or inflation-adjusted dollars while investors think in terms of nominal, or non-inflation, adjusted dollars. Inflation is quite variable, but on the simple assumption of an annual 3 percent rate, the “Rule of 72” would yield a doubling in nominal dollars (real growth plus inflation) every 12 years. The point I hope to make is a happy one and consistent with basic economic theory. When a seller sells an asset to a buyer, both parties can gain by the transaction. The buyer believes that the purchase of the asset is the best available alternative to him; the seller believes it is the best alternative for realizing his existing investment. People will invest where they believe they will get the greatest return. This results in an efficient allocation of capital in our society. Money flows to its best use. What makes all this possible is the continuing growth of the economy. One way to think about the difference between gambling and investment is that when gambling at a casino, the house takes 3 percent of all bets, and, in investment, the economy adds about 3 percent per year to the aggregate of all bets.

An Essential Quality is Humility The pitfall that too often affects the investor is overconfidence, which leads to arrogance and the feeling that he is the smartest guy in the room. It seems to be particularly virulent in a young person with an initial success or two. These people have a tendency to gather a collection of folks who pander to and support the investor’s feelings of importance and superiority, which further distorts his view of himself. If the investor is also the head of an organization, this perspective tends to destroy his leadership abilities. It is important to keep in mind that high income or exceptional wealth does not make one a smarter or better person. When an academic or lawyer calls someone “smart,” it is meant as a compliment. It usually means that the person is good at developing abstractions from a complicated mass of data, is articulate, is able to reason persuasively and often is quick with numbers. However, when a businessman calls someone “smart,” it is not necessarily a compliment. While he means the same thing, the term “smart” misses what is important to the businessman: effectiveness. If good things don’t happen over which the person is responsible, it doesn’t matter how smart the person is; he is ineffective. I have often heard a businessman describe a manager who he has fired as “really smart.” So don’t try to be smart; try and be effective. For the investor, this arrogant behavior is particularly insidious because it distorts his sense of reality. We all have different perceptions of reality and see the world from different points of view, but it seems to me that a more or less consistently successful investor is constantly testing his sense of market reality. If this testing process does not involve some mistakes that the investor realizes are mistakes, he cannot properly adjust his sense of reality to the market and grow in his knowledge. There are a great deal of very wealthy people who made a ton of money on an early investment and, thereafter, were very mediocre or unsuccessful investors; unfortunately, they continued to maintain a sense of personal importance and superiority. On a personal level, this self-important behavior really offends me. If the revolution comes, it won’t be because the rich are rich; it will be because the rich are arrogant and act like they are better than other people. Be warned, descendants of mine: if you behave like this, I will come back from the grave to haunt you!

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

B. Be very careful about letting political rhetoric and election results influence your investment decisions. There is a big difference between how people vote at the voting booth and how they vote with their pocket book. And there is a big difference between what politicians say they will do and what economic and political circumstances allow them to do. The 1992 presidential election was won by Democrats. During the campaign, President Clinton and Vice President Gore emphasized the need for the country to become more focused on the environment. This involved cleaning up existing environmental problems and generating new businesses that aided the environment, such as clean energy. My assumption on their election was that existing environmental laws would be more rigorously enforced and new ones would be adopted. I was not alone in my assumption. In 1993 there were a lot of start-ups in the environmental business and a lot of existing companies started or grew their environmental divisions. There was a bandwagon effect supported by a lot of news media stories. All of this influenced my decision to buy a land-based environmental business. For a variety of economic and political reasons, the assumed increase in demand for environmental services and products did not materialize and for some reason the existing laws were not as rigorously enforced during the Clinton Administration as they had been during the previous Bush Administration. As a result, most of these environmental businesses expired and tons of money was lost in clean energy projects.

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

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

D. Financial projections for start-ups, mergers, spin-offs of a corporate division, or any project in which substantial change is contemplated are most often badly flawed. In fact, I cannot remember one that was not flawed. In spite of this experience, we have often placed too much weight on the projections as a driver of the decision to invest. The flawed projections are not the result of a poor work product. Nor are they the results of biases, except sometime in cases where the proponent of the project is seeking other people’s capital. They are the result of the assumption that we can develop reasonably accurate numerical boundaries on future events that are not the result of repeated past experiences. The high failure rate of mergers, start-ups and the like attest to the futility of this effort. Yet there is something comforting about numbers that describe the future which causes us to continually make this mistake. I am not arguing that financial projections should not be made. A rigorous approach to the planning process is important. They provide valuable insights into the business or project and can, to some extent, quantify some of the risks and opportunities. Their real value is that the work of making projections helps prepare the person to react to events, but not to predict events. My point is that such projections should not drive the decision to invest. E. Structuring a transaction, negotiating a contract to buy a company and then closing the deal is immensely satisfying. Over the years it has given me a sense of accomplishment that few other business activities can match. The more difficult the transaction and the more creative the solutions to the problems connected with the deal, the greater the satisfaction. Here lies the problem. Doing deals can become addictive and one can lose sight of their purpose. In my experience, some of the best deals I have made are those I have walked away from. The simplest and most straight forward acquisitions have, as a rule, been the most successful. n

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employee turnover, the largest return is realized from expanding the breadth of the contact portfolio to mitigate the loss of relational ties and speed relational recovery. Interestingly, the research suggests that contacts that are the most difficult to access and deal with may be the most valuable, whereas customers that are easy to access may generate the lowest returns. Thus, busy salespeople making their rounds to their favorite customers (who are often open to meetings and easy to deal with) might be able to enhance performance by shifting their resources to firms or contacts that are more difficult to access. “Overall, interfirm relationships represent a complex web of interconnections that requires a more fine-grained and strategic approach than is typically utilized in academia and practice,” reports Palmatier. n

©, stdemi, ctoelg

Top research honor recognizes work in business-to-business relationships multidimensional model for examining business-to-business relationships. He found that while relationship quality plays an integral role in the value generated by interfirm relationships, so do the breadth of contacts, the decision-making authority of contacts, and the synergy among all three characteristics. Palmatier says, “Most importantly, measuring, understanding, and building interfirm relationships requires a multidimensional theoretical perspective. Depending on the specific context and the marketing objective of the seller, different relational dimensions are most critical at improving performance.” For example, successfully selling new products to customers requires sellers to increase the diversity and authority of their contact portfolio. Alternatively, to maintain and grow sales at businesses with high

Want moral behavior?

Investors put their money behind substance over style

Pay attention to moral attentiveness

The stereotypical entrepreneur is all about passion—a hyper-extroverted pitchman skilled, above all, in the persuasive arts. But a new study demonstrates that preparedness trumps entrepreneurial passion when it comes to gaining backing from potential investors, according to Foster School authors Xiao-Ping Chen, professor of management and organization and an Evert McCabe Faculty Fellow, and Suresh Kotha, professor of management and organization and the Olesen/Battelle Excellence Chair in Entrepreneurship. The findings, culled from two years of UW Business Plan Competitions, show that non-verbal cues such as animated facial expressions, energetic body movements and buoyant tone of voice make little, if any, difference in persuading investors, even as they convey passion for the enterprise in question. Chen says that true preparedness suggests a deeper, more cognitive form of passion that is not so easily perceived in a brief pitch. “Nevertheless, in our study, presentation style mattered little in gaining support—a finding that may apply not just to venture capital decisions but to other selection contexts, such as job interviews or report presentations.” The study is published in the Academy of Management Journal. n

Awarding Theory In February, Robert Palmatier, assistant professor of marketing and Evert McCabe Faculty Fellow at the Foster School, received the American Marketing Association’s 2008 Harold H. Maynard Award for his article “Interfirm Relational Drivers of Customer Value.” The award recognizes one Journal of Marketing article each year for its significant contribution to marketing theory and thought. Noting that 20 years of relationship marketing research has focused on the positive effect of strong customer relationships, Palmatier poses a critical question in the article: What other attributes or mechanisms, in addition to relationship quality (trust, commitment), can account for relationship marketing’s effect on performance? Using social network and exchange theory, Palmatier developed a new

Passion v. Preparedness

We may see ethics in black and white or infinite shades of gray. But whether we view our decisions as ethical issues at all depends on our level of moral attentiveness, a concept developed by Scott Reynolds, an assistant professor of business ethics at the Foster School. Moral attentiveness is an assessable personality trait—a filter through which we see the moral ramifications of decisions in differing degrees. New research by Reynolds finds that knowing a person’s level of moral attentiveness can predict his level of moral behavior over time. This new assessment tool could have great value in predicting and promoting an ethical workplace. Reynolds cautions that high moral attentiveness is no guarantee of moral behavior. Likewise, low moral attentiveness doesn’t necessarily mean immoral behavior is inevitable. “But for those who see an ethical issue, they are well down the path of finding an ethical solution,” he adds. “And for those who don’t see an ethical issue at all, the odds that they will act ethically seem to be reduced.” The study is published in the Journal of Applied Psychology. n

The long view on short selling Controversial practice provides important benefit to market

Short sellers—who profit when share prices fall—are considered, by many, to be pariahs of the stock market. But new research by Jonathan Karpoff, the Norman J. Metcalfe Endowed Professor in Finance, finds that these negative investors serve a positive purpose in at least one important circumstance—when dealing in companies that are cooking the books. Karpoff investigated the volume of short selling leading up to more than 600 cases of corporate fraud and found that short sellers: 1. expedite the average time to discovery of corporate misconduct (from 26 to 18 months). 2. abate the inflation of a company’s share prices during the period of financial fraud (by publicizing negative information in an effort to lower the price of a company’s stock). 3. do not worsen the inevitable share price drop when a firm’s fraud is revealed publicly. Karpoff’s study won the best paper award at the 2008 University of Chicago Center for Research in Security Prices (CRSP) Forum. He also won a Q-Group grant to further explore the question of whether short sellers, on average, are good at predicting which firms will get busted for fraud. n

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Market Driven Mixed-up Messages

Intelligent team layoffs can maximize adaptation

Marketing messages may backfire for consumers in uncommon situations

When company downsizing means surgically removing individuals from work teams, new research from Michael Johnson, an assistant professor of management at the Foster School, finds that team composition and disposition affect how well the surviving members adapt. Johnson’s research looked at simplified work teams comprised of a leader and several team members. Likewise, downsizing was limited to three scenarios—removing the leader, removing a team member, and removing a team member and shifting the leader into his role. The study found that removing the leader results in the most complete adaptation as the surviving team members realize that everything has changed and they must share responsibility. Teams that bear a high degree of emotional stability have the strongest chance of adapting most quickly and completely, and performing at a level approaching the pre-downsized team. “We’re not suggesting that in every team downsizing situation the leader should be taken out,” Johnson says. “But self-managing teams can be effective when they share leadership responsibilities.” The study is published in the Academy of Management Journal. n

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A favorite technique in the marketer’s playbook is “priming” consumers with subtle messages to encourage consumption. For example, the suggestion of thirstiness embedded in a Coca-Cola advertisement is intended to activate a desire to drink a Coke. But a surprising new study co-authored by Marcus Cunha, Jr., an associate professor of marketing at the Foster School, reveals that goal priming can backfire, especially when consumers encounter uncommon situations. In one experiment, Cunha primed students to choose either a casual restaurant or a fine dining establishment by exposing them to words related to having fun or to impressing others. He found that participants chose the intended restaurant when asked to pick a place to eat that night (a common situation). But when asked to choose a place to eat a month from that night (an uncommon situation), the students chose the restaurants opposite to their prime. Subsequent studies yielded similar results: in familiar situations, priming goals worked. In uncommon situations, the goal priming backfired. “Our findings suggest that retailers should understand the amount of experience consumers have with certain choice situations before using priming as a marketing tool to influence consumers,” Cunha says. The study appears in the Journal of Consumer Research. n

Ann Schlosser listed among 50 most prolific marketing scholars Ann Schlosser, an associate professor of marketing and Marguerite Reimers Faculty Fellow, has been identified in the Journal of Marketing as one of the 50 most prolific scholars in marketing over the past quarter-century. The ranking takes into account marketing faculty publications in the field’s leading journals during the years 1982-2006. Schlosser was previously named the second-most prolific scholar of Internet-related marketing research in the Journal of Advertising. That 2006 listing considered faculty contributions in this area of study from 1994-2003. Since beginning her studies in online marketing at the dawn of the commercialized Internet, Schlosser has published dozens of pioneering papers examining revolutionary marketing methods that have become standard operating procedure in the New Economy. Topics have ranged from virtual product experiences to consumer attitudes on Internet advertising and regulation, from the digital divide to converting Web site visitors into buyers. Her latest research, to be published in the Journal of Consumer Psychology in June, finds that allowing customers a sense of choice over the product information they receive online can result in a more positive view of the company, and make them more likely to buy the product. n

Hard Time Executives actually do pay dearly for financial fraud In the wake of Enron and a raft of other major corporate scandals early this decade, a March 2002 Fortune magazine cover voiced the widely Jonathan Karpoff held opinion that white collar crooks were running rampant in American board rooms. “They lie, they cheat, they steal,” the headline exclaimed, “and they’ve been getting away with it for too long.” The facts, however, suggest otherwise, according to Jonathan Karpoff, the Norman J. Metcalfe Endowed Professor in Finance at the Foster School. An extensive new study led by Karpoff finds that the vast majority of culpable executives in cases of financial misrepresentation see significant penalties that range from job loss to jail time. ©, geopaul, cloudytronics

Downsize Wisely

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

Along with co-authors D. Scott Lee of Texas A&M University and Gerald S. Martin of American University, Karpoff tracked the fortunes of the 2,206 individuals identified as responsible parties for all 788 Securities and Exchange Commission (SEC) and Department of Justice (DOJ) enforcement actions for financial misrepresentation from January 1, 1978, through September 30, 2006. Much of the period under analysis preceded the Sarbanes-Oxley Act of 2002, which increased criminal penalties and exposure to liability for financial fraud. The researchers found that 93 percent of the culpable executives lost their jobs by the end of the regulatory enforcement period. Most were explicitly fired. The likelihood of ouster increased with the cost of the misconduct to shareholders and the quality of the firm’s governance. Culpable managers also bore substantial financial losses through restrictions on their future employment, their shareholdings in the firm, and SEC fines. A sizeable minority (28 percent) faced criminal charges and penalties, including jail sentences that averaged 4.3 years. The system works, as far as we know These results indicate that the individual perpetrators of financial misconduct face

significant disciplinary action. “It turns out that the sky is not falling,” Karpoff says. “Our research demonstrates that, on average, firms do have ways to identify and discipline rogue, cheating managers. And it supports the notion that the SEC and Department of Justice actually do have teeth in their enforcement activities, even in the days before Sarbanes-Oxley. The current mix of firm governance, managerial labor markets, and regulatory oversight does, in fact, discipline this type of illegal behavior. “Of course, no system works perfectly. Some bad guys walk away with bundles. And we still have no reliable way of knowing how many don’t get caught in the first place. We, and others, are working to gain some insight into that problem.” The paper, “The Consequences to Managers for Financial Misrepresentation,” was published in the May 2008 Journal of Financial Economics. It’s the latest in Karpoff’s series of studies on corporate crime and punishment, and a follow-up to “The Cost to Firms of Cooking the Books,” which established that companies pay a significant financial penalty when their reputations are tarnished by financial fraud. n

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

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



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

Rice: If it gets close to 10 percent, it’s a

Kolasinski: What happens to the Dow

this year depends on whether we get our banking system fixed, and I’m not optimistic about that. If we could write down the debt of the banks, clean up their balance sheets and operate normally, we could be well above 8,000 or even 9,000, by the end of the year. But I’m not convinced that’s going to happen. We keep propping up banks that are on the verge of insolvency and they’re operating like zombies— we’re not getting anywhere.

Financial Predictions Foster finance faculty offer some highly educated guesses about the future state of the economy

Dewenter: We’re in for two years of really

Casey Stengel, sounding like his catcher Yogi Berra, once said, “Never make predictions, especially about the future.” But since investors and consumers need to make decisions every day, speculation about the future is unavoidable. With this in mind, James Jiambalvo, dean of the Foster School, rounded up a group of finance faculty on February 19th and asked them to prognosticate with respect to the US economy. Specifically, they were asked to consider three questions:

bad times, so the Dow will not go up until the economy shifts and the credit crisis is fixed—well into 2010.

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

fidence. The credit system is broken and it’s not going to be fixed quickly so we won’t see a rebound in the Dow above 8,000.

Hajimichalakis: There’s a total loss of con-

Kolasinski: It comes down to what kind of

Foster faculty addressing these questions, were: Kathryn Dewenter Joshua Green Family Endowed Associate Professor of Finance PhD, University of Chicago

Adam Kolasinski Assistant Professor of Finance PhD, MIT

Thomas Gilbert Assistant Professor of Finance PhD, UC Berkeley

Edward Rice Associate Professor of Finance PhD, UCLA

Karma Hajimichalakis Principal Lecturer in Finance and Evert McCabe Faculty Fellow PhD, University of Rochester

Stefan Siegel Assistant Professor of Finance PhD, Columbia

Jarrad Harford Marion Ingersoll Professor of Finance PhD, University of Rochester

Lance Young Assistant Professor of Finance PhD, University of Rochester

Above Rice: People are very risk-adverse now,

which creates a huge risk premium for the market. Current prices are already discounted and the market expects them to rise to compensate for risk. Harford: I agree with Rice. We have

As you will see, like financial experts around the country, agreement by the Foster panel was far from unanimous.

10 months with more upside than downside because prices are low and the risk premium will get us above 8,000. ©, duckycards

Jonathan Karpoff Norman J. Metcalfe Endowed Professor of Finance PhD, UCLA

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banking fix the Administration proposes. I think whatever they come up with will be worse than people think it will be. When the details come out, I think the market will go down even more.

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

dangerous political place for President Obama, and he will start hiring people. Also, it’s important to know that measured unemployment can stay low because people give up on looking for a job. If someone is not looking for a job, they’re not counted as unemployed!

Young: We haven’t talked about deflation. Inflation is bad, but deflation is really bad. Some people are really concerned about this; with actual deflation, we could get into a spiral that would be hard to stop. There haven’t been many episodes of this, but when it happens it’s very dangerous, and some people are concerned about that now. Karpoff: The Fed learned from the 1970s about consumer price inflation and has been disciplined about keeping that down.

Kolasinski: In all the macroeconomic


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

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

Above Gilbert: Firms are trying to maximize the

likelihood of survival, so they’re cutting costs and doing what they can to survive. So the rate could go higher, even up to 12 percent. Managers just want to survive and stay in business. They can always let go of people and re-hire them later. Managers are thinking, “I just want to stay in business.” NET: The panel majority predicted unemployment would be below 10% (5-4)

Question 3. Will inflation be above or below 3 percent in 2010? Below Kolasinski: I don’t think inflation will

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

NET: The panel majority predicted inflation would be below 3% in 2010 (5-4)

Postscript from Dean Jiambalvo

As indicated, the finance faculty met on February 19th. On that day, the Dow was 7466. On April 24th, when this article was sent to press, the Dow was 8089. In February, the unemployment rate was 8.1 percent. In March, the rate rose to 8.5 percent. What will inflation be in 2010—that, of course, remains to be seen. We’ll revisit these predictions after the end of the year. n

pick up in 2010. Even though the Fed has increased the money supply, they can decrease it quickly and sell off their portfolio of Treasury bonds.

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faculty What is your relationship to the University of Washington?

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

It goes back to when I was 4 or 5 years old. My father had a grocery on Thackery (corner of Latona and 45th) before the Depression. So the college campus was my home; frosh pond was my swimming pool—when it was hot we’d go there until we got kicked out. The UW and the neighborhood are like a warm and fuzzy blanket to me. When did you get involved with the Foster School of Business?

Well… not formally until my wife, Lynn, and I sponsored a UW class that ties together the Foster School and the School of Social Work.

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

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

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

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

“One of the things that universities can do is bridge that gap—the goal is not just to create better businesspeople or better social workers, but to train better human beings.” Why connect those two schools?

I think it’s easy to come out of business school and think your whole role in life is to join an organization and help maximize profits; but that’s really only part of your responsibility. On the other side of things, social work grads need to understand that without a successful economic engine, there are no resources to drive good social policies. The two schools of thought may not always agree, but they need to understand each others’ language and role in society. As retired president of Starbucks, do you feel like business has a bad name?

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

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What are some case studies that demonstrate winning at values and profits?

You talk a lot about people being the key in business and in organizations, and have published It’s Not About the Coffee: Leadership Principles from a Life at Starbucks. How did you develop your leadership philosophies?

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

That is certainly the perception. It’s like in Fiddler on the Roof—what does Tevye sing? “If I were a rich man…” The assumption is that you generate wealth and then you’re more important, sought after for wise counsel, and greatly admired by the community. Real success is better defined by how you develop people. Profitability is a critical metric of how a business is doing, but maximizing profits shouldn’t be the end game. What is the most important thing the Foster School of Business can teach?

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

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Snapping the Globe A photographic glimpse into the life-changing experiences of Foster students studying abroad The Global Business Center’s 2008 Study Abroad Photo Contest drew a veritable gallery of images captured by many of the 250 undergraduates and 150 MBAs who took leave of the Foster School for an international study experience in the past year. Here are a few of the best from around the world.

Second prize:

First prize:

“Bendin’ Backwards for Crayola” Soweto Township, South Africa By Kim Pham

Third prize:

“Pedal Power” Rotterdam, the Netherlands By Anna Demyani

“Eye of the Beholder” Rome, Italy By Elizabeth Whiteman

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

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

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

Tokyo, Japan Alice Karsevar

Galway, Ireland Anne Paulsen

Rosetta, Egypt Hillary Matson

Amsterdam, Netherlands Jenny Wang

Shanghai, China Joey Hwong

São Paulo, Brazil Josue Mendoza

Fast Company Marc Barros + Jason Green + wearable camera + Internet = adventure community

Prague, Czech Republic Kate Kingen

Afrodesias, Turkey Kathleen August

Kyoto, Japan Kelly Voss

Marseilles, France Monica Barrett

Trogir, Croatia Nathan Buxbaum

Granada, Spain Scott Cornish

Buenos Aires, Argentina Taylor Sloane Zurich, Switzerland Tye Howell 30 f ost e r B U S I NES S

Capetown, South Africa Victor Okocha

Kobe, Japan Wilson Wong

Guadalajara, Mexico Shirin Ebrahimi

Seoul, South Korea Sook Kim

You’re careening down a mountain bike trail, plummeting from the troposphere, yo-yoing at the end of a bungee cord, avalanching down an icy cliff. And your immediate concern is…? a. Self-preservation. b. Maintaining normal bodily functions. c. Choosing the appropriate last expletive. d. Capturing the rush to post on the Internet.

If your answer is d., you may already be acquainted with the VholdR high-velocity wearable video camera and its creators, Marc Barros (BA 2003) and Jason Green (BA 2003). The tough, tubular camera attaches to a helmet or goggles to allow the adventure sportsman or woman a hands-free way to chronicle adventures in first-person video that can be easily posted

on VholdR’s social networking site to be shared by kindred spirits around the world. In less than 18 months on the market, the company counts 10,000 extremely active users in 60 countries engaging in 60 different adventure sports—from snowmobiling to parasailing, mountaineering to skateboarding, BASE jumping to kayaking. “VholdR is bigger than the camera,” says S P R I N G 2 0 0 9 3 1

alumni Barros, CEO of Twenty20, maker of the VholdR. “It’s a camera driving an international community. Community is the difference.” User-entrepreneurs Barros and Green got into fast-movingvideo while students at the Foster School. With partner Tim Ennis (BA 2003), they won third place at the 2003 UW Business Plan Competition with Motocam, an onboard camera system that covers a motorcyclist’s blind spots. But Motocam was the passion of Ennis, a daily motorcycle commuter. Barros and Green were skiers, and safety was not their concern. They were vexed by their lack of ability to record their downhill adventures. And they suspected that legions were similarly frustrated. They morphed the Motocam concept and brought it into a new arena as big as the great outdoors. Operating out of a garage on a modest line of credit co-signed by an uncle, Barros and Green assembled a wearable lens that attached to a camcorder that had to be borne in a backpack. Not the most elegant solution, it nevertheless found a niche market. “And then came YouTube,” says Barros, “which changed everything.” Light camera, action! Even though their analog lens was selling briskly, Barros and Green could see the pixels on the screen. They ceased production in 2007 and began developing an all-in-one wearable camcorder that could upload video directly to the Internet, a la YouTube. “When we started with a Chinese manufacturer less than two years ago, it was just the two of us,” Green says of their adventure in offshoring. “It took them a while to realize that these two kids weren’t joking when they said they wanted thousands of these.” They needed thousands. “We had revenue from the beginning,” Barros says, laughing. “We told customers we were going to make this new camera, and they started sending in orders. So Jason and I said to each other, ‘Okay we better go make this thing.’” They convinced Ziba, the celebrated 32 f ost e r B U S I NES S

Portland-based product design firm, to take them on for a royalty. “We realized we couldn’t just put a plastic case around it,” Green says. “That would be the death of us.” By the end of 2008, the VholdR was selling on, at REI, and an archipelago of outdoor sports specialty retailers. It has won prestigious innovative design awards from International CES and BusinessWeek. And in little more than one year, a voracious market has committed to “wear, shoot, and share” their adventures. Of the 10,000 VholdR owners, more than 80 percent actively post their thrill-ride videos to the site, building an unrivaled database that’s in on the action, wherever on earth it’s happening. “It’s a true community of adventure sports enthusiasts,” says Barros, “that just happens to be driven by our camera.” Go big or go home Despite the distressed economy, adventure sports continue to penetrate further into the mainstream. Barros counts 100 million activists worldwide, and growing. So he and Green are all in. “We realized that either we make this a stepping stone to the next start-up, or bring in some experience that can help us grow this thing. That’s the option we chose,” Barros says. “We think there’s a huge opportunity, so let’s go big.” Today they orchestrate a seasoned staff of 12 and a network of distributors and sales reps that reaches across the globe. They recently unveiled the world’s first wearable high-definition camcorder. But they’re largely still in start-up mode: lean operations, zero advertising, no frills. Great Recession notwithstanding, they like their chances. “Our timing couldn’t be better, really,” Barros says. “We’ve matched shareable video with the rise of the adventure sports lifestyle and social networking. We’re hoping to double or triple our business this year, even though the economy is tough. “People are still passionate about their lifestyle. We’re selling the simplicity of sharing the adventure.” n

Offshoring Onshore

Breaking Barriers

Melissa Adams learns first-hand about global IT outsourcing

President Barack Obama wasn’t the only politician to make history in 2008. Cindy Ryu (MBA 1983), Shoreline’s mayor, became the first female Korean-American mayor in the US on January 7, 2008. She credits a strong work ethic and supportive family as keys to her success. Ryu emigrated twice before age 13, leaving the economically-devastated South Korea with her family for Brunei, then moving to the Philippines before immigrating to Washington state in 1969. Her parents sought a life free of political, cultural, and economic oppression, while Ryu learned first-hand that hard work was necessary to survive. “My parents drilled into me and my three brothers that we were in America for economic and educational opportunities,” she recalls. Upon graduating from Centralia High School with honors and voted ”girl most likely to succeed,“ Ryu prepared for medical school. She earned a BA in microbiology with honors from the UW and scored high on her MCAT exam, but wasn’t accepted into medical school, saying, “I looked good on paper, but bombed the interviews.” She regrouped and pursued an MBA at the Foster School “to learn how to lead.” Too shy to speak up in class, Ryu coupled her degree with a year of public speaking via Toastmasters, pushing herself beyond her comfort zone. The Shoreline area has been her home for over 25 years, raising three kids with her husband Cody Ryu (BA 1982). A model citizen, Ryu was an active PTA member for nearly 15 years while working with her husband in a Shoreline-based insurance business. As a leader, Ryu takes a bird’s eye view when solving problems, connecting a piece of legislation to a greater vision. The seeds of Ryu’s leadership style were planted back in business school. Ryu says, “I concentrated in operations management and use my MBA on a daily basis. Operation studies helped me look at the big picture and pinpoint where the training or improvement

Concerned about offshoring? Excited about offshoring? Curious about offshoring? Melissa Adams (BA 2007) wanted to experience it first-hand after studying Thomas Friedman’s “The World is Flat” in an international business class at the Foster School. So after graduation, she joined India’s InfoSys, one of the planet’s largest IT outsourcing firms. With a group of 80 Americans, Adams lived in Mysore, India, for six months, training in software engineering alongside thousands of Indian, British, Central American, and Chinese young professionals at the sprawling InfoSys campus. “Software engineering may seem to be a bit of a leap for a marketing major,” she says. “But I thought it would be a good opportunity not only to develop a new skill set, but to learn more about offshoring and international business from an Indian perspective. It was an excellent experience on both levels.” It also put her on the front line of a growing trend in offshoring: the localization of the most complex and strategic IT processes by globalized IT firms. Today Adams is living in New York City, working with India-based InfoSys for a European wealth management firm in its US headquarters. Through her, offshoring has come home (wherever that is). n

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

needs to be.” One of Ryu’s most formidable challenges as mayor is completing upgrades to the three-mile Aurora Avenue strip of businesses that comprise 88 percent of Shoreline’s sales tax base. She recently traveled to Washington, DC to request federal funding to help complete upgrades to Aurora, an infrastructure project that she sees as critical for her community. Volunteerism is also part of Ryu’s vision as mayor. Inspired by Obama’s call to national service on MLK Day, Ryu helped double the expected number of volunteers for that day of service and envisions hiring a Shoreline volunteer coordinator “to mobilize multiple generations for the collective good.” Equality and fairness are matters of principle for Ryu and she brought those ethics to a business venture with her husband when they reorganized their Shoreline Allstate Insurance agency. Her husband, having been the principal agent for years, proposed her 49 percent partnership to his 51 percent when they became co-owners in 2000. Ryu recounted, “We are equals. We each got 50 percent. I negotiated nicely but firmly.” Ryu took on long-term financial planning for joint ventures that still pay dividends. “After Cody and I helped build up the agency over a 24-year period, it became our cash

cow. With a mandatory reorganization and ownership structure, we realized we could also sell the business.” Ryu and her husband also diversified, buying commercial properties along Highway 99, investments that allow Ryu the opportunity to serve as mayor while she and her husband manage the buildings part time and spend more time with family. Ryu draws inspiration from her family. Middle child Christine (a current UW engineering student), ran for high school student council, encouraging Ryu to run for office. Ryu served on the Shoreline City Council for two terms prior to being elected by her peers as mayor. When she originally raised the idea of running for office with her husband, whom she calls “my best friend and sounding board,” he replied, “You have supported me for 20 years, and now it is my turn to support you.” Aside from family, Ryu says her Christian faith gives her a sense of higher purpose. “My way of loving my neighbor as myself is to serve in public office.” Ryu is running for re-election because she enjoys the strategic planning and policy setting. In many ways, she is living the American dream. By giving back to her community, Ryu is able to advocate for improvements that will outlast her term of office. n

S P R I N G 2 0 0 9 3 3

alumni Leadership Matters

Top Secret Alumni News:

You’re a Member for Life

Some thoughts on a “Foster first” alumni network from Assistant Dean Steven Hatting Harvard Business School is billed as the birthplace of the MBA. However subjective that statement may be, it is generally agreed that HBS’ success has benefited greatly from a definitive alumni network that effectively clears a path from firstyear admission to the corner office. In fact the last two Foster School Advisory Board chairs, both Harvard alumni, can attest to this. The immediate past chair, Artie Buerk (BA 1958), describes the alumni network at Harvard as “potentially more valuable than the education itself.” While Artie may not have intended his quote to be taken literally, I find value in it. Harvard’s graduates wear their alma mater on their sleeves. When was the last time you told someone you are a graduate of the Michael G. Foster School of Business at the University of Washington? (I know it’s a name that’s still new to 90 percent of our alumni, but there’s no better group to get the word out and build our brand than our graduates!) Why keep it a secret? We take pride in our alumni and hope you feel the same about your alma mater. The benefits of getting the word out should be tangible for all of us. I can’t help but wonder what would be possible if we could get our graduates to consistently think “Foster first” for their company needs and opportunities—particularly in today’s economy. The talent-rich Foster network is out there and loaded with potential—factor in our outstanding undergraduate alumni population and it’s actually larger in degreed alumni than the vaunted HBS!

CALLING ALL FOSTER GRADS… Often we refer to our graduates as stakeholders, but in this case I prefer the term shareholders. By virtue of your degree, whether it was completed six months or six decades ago, you have voting rights and can mandate the importance of strengthening a Foster Alumni Network. You can vote to support your alma mater as well as yourself, your fellow graduates, your companies, and your communities by attending and even hosting Foster School events, volunteering to help, asking for faculty expertise or outstanding student talent…using YOUR Foster School network. Too many times I hear that we only contact alumni when we need money. Well, we’re always going to need money and frankly the participation in support of the Foster School Difference Fund continues to run behind that of our peers. BUT…most of our outreach has nothing to do with fundraising. Dean Jiambalvo has said the Foster School needs to be a source of information

and inspiration. We’re poised to become that definitive source for strategic leaders and research in the not-too-distant future. I challenge you to get involved in 2009 and beyond. If you haven’t been since you graduated, just do one thing…go online and update your professional records, ask your corporate recruiter to visit the Foster School, go to one of our events, get some career advice or even make an annual gift if you have more money than time. You can also e-mail me at hatting@u.washington. edu and easily tell me how we can serve you to strengthen our alumni network, enhance our reputation, and advance members like you. I’m very interested in your thoughts about how we get our alumni and friends to think of Foster first for business education, business talent, and business opportunities. Your UW and Foster alumni membership is an asset worth leveraging and a secret worth sharing. Thanks for getting involved and spreading the word. n

EVENTS CALENDAR June 16, 2009 BEDC Annual Report to the Community Luncheon 12:00 - 1:30 p.m. Seattle Westin Grand Ballroom June 27, 2009 PACCAR Hall Picnic for Foster School Alumni, Friends, and Families Denny Yard July 18, 2009 Ernest I.J. Aguilar Endowed MBA Scholarship Dinner and Auction 4:00 - 7:00 p.m. Conibear Shellhouse UW Campus September 11 - 13, 2009 MBA Reunion Weekend for class years 1984, 1989, 1994, 1999, 2004 September 14, 2009 Executive Development Program begins Bank of America Executive Education Center   November 5, 2009 Business Leadership Celebration Keynote speaker: Marilyn Carlson Nelson For more information on all these events, visit

Class of 2009 graduates will add more than 1,000 to the growing Foster Alumni Network. Shown at one of the many Husky Men’s Basketball victories this season are four of our newest alumnae who really know how to show their school pride: Michelle Low (accounting), Heidi Hankins (finance/marketing), Emily Warner (finance/marketing), and Amy Sharpe (marketing/sales).

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While Marilyn Carlson Nelson may not be a household name in the Northwest, in Midwest business circles “Carlson” is the equivalent of Seattle’s Boeings, Nordstroms, and Pigotts. Carlson Nelson’s family business, Carlson, is one of the largest and most successful private companies in the world, with 160,000 employees in 150 countries and annual revenues of nearly $40 billion. Offerings over the years have ranged from trading stamps to luxury cruises, though the business is now focused on key holdings that include Radisson and Regent hotels and restaurant staples like T.G.I. Fridays. Stepping out of the day-to-day Chief Executive role in 2008, Carlson Nelson remains chairman of Carlson and will be visiting Seattle on November 5th to serve as keynote of the Foster School’s 18th annual Business Leadership Celebration. She will be sharing lessons learned over a lifetime that’s taken her from educational experiences in Paris and Geneva to pressing 9Gs in an F-16 to bringing the Super Bowl to Minneapolis (if you’ve ever been to Minnesota in January, you can appreciate what a feat that was!) and even helping to bring her industry back in the devastating aftermath of 9/11. Carlson Nelson has chaired the World Economic Forum in Davos and, by Presidential appointment, led the National Women’s Business Council. She serves on numerous civic and corporate boards, including the Mayo Clinic, the Kennedy Center for the Performing Arts, and ExxonMobil, named the world’s most profitable company in 2008. Marilyn is also the current chair of the U.S. Travel and Tourism Advisory Board. Carlson Nelson has published a book of reflections entitled How We Lead Matters. A quick review of the Carlson trophy case suggests she has more than passing knowledge of her subject matter. The company founded by her father and once known for its hard-charging, male-dominated bravado is often cited as a favorite on the annual lists of “Best Places to Work,” and boasts a culture celebrated by working mothers in particular. Interestingly, her book, which proves to be a quick and lively read, demonstrates the intended double entendre. Collectively, via historic quotes and brief one-page anecdotes, a blueprint emerges for how one successfully leads. Carlson Nelson, a regular herself on the Forbes list of the most powerful women in business, brings a humanity, approachability, and set of values that have helped her reshape Carlson’s culture while enhancing its profitability and community activism. n Register Now for a Preferred Rate! The Business Leadership Celebration is the Foster School’s marquee Seattle event for

alumni and friends. Among those being recognized this year are two distinguished alumni who have done as much to advance our community as they have to advance their businesses. Don Nielsen (BA 1960) made his mark with Hazleton Laboratories along with Kirby Cramer, but he is now viewed as a champion for teaching reform and advancing K-12 education in Seattle and across the nation. Phyllis Campbell (MBA 1987) has recently opened a new chapter by taking the top leadership post for JPMorgan Chase in Washington, after being the president and chief executive for the last six years at the Seattle Foundation, where she helped more than double its charitable assets and increase funding provided to the community. Join these dynamic leaders in November, and with this announcement in Foster Business, we are opening registration with a Summer Special rate good through June 30. Register as an individual attendee for $85 ($40 off our 2008 rate) by visiting banquet. Also, for $5 more, we will send you a copy of Marilyn Carlson Nelson’s book, How We Lead Matters, so you can do your homework before the event. Again, this rate is good through June 30 only, so act now. Those interested in saving up to $1,000 with a corporate sponsorship and table purchase should contact Jenny Selby at 206.221.6725 or by the end of June.

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first person

Bigger Than Business Through the Global Social Entrepreneurship Competition, a UW linguistics student sees the Foster School as a cross-disciplinary catalyst for world change By Lindsey Engh

Lindsey Engh, graduating this year with a major in linguistics, spent some time in February at the Global Social Entrepreneurship Competition, a three-day event hosted by the Foster School’s Global Business Center that challenged student teams from around the world to find creative, sustainable solutions to problems of poverty in the developing world. For more information on the competition, visit As I walked around the first Global Social Entrepreneurship Competition (GSEC) event that was open to both the public and potential investors, I noticed an exuberance among those present that seemed counter-intuitive amidst team rivalry and seriousminded investors. Everyone in the room knew for certain that each idea displayed on a poster or vocalized in the infamous one-minute elevator pitch held the potential to become a tangible project, capable of changing the lives of people all around the world. For me, conceiving ideas and gaining knowledge in a specific area is much easier when there is a concept that exactly describes what I am pursuing. “Social entrepreneurship” was not always a ready term in my vocabulary. As a non-Foster School UW student, I was first introduced to the idea of social entrepreneurship and social business through an internship in Washington, DC last spring semester. I returned to UW not only with an interest, but also up-close experience, in the role that social business can play in the developing world. Luckily for me, UW is one of a few schools in the US that focuses on this specific aspect of entrepreneurship, and I was able to take a social entrepreneurship course at the Foster School. Social business was now a familiar presence in my mind, and I was ready to find a tangible outlet. GSEC was my next discovery, and with my growing experience with the Foster School, external NGOs, and social enterprises, I quickly grew to understand the role that business and nonbusiness majors alike must take in the growth of worldwide social enterprise. Changing international social issues is an endeavor that involves persons from every background. The plethora of ideas and innovations emerging to combat global social issues opens the door for anyone with the passion, motivation, and realization of their own skills to take part in the continuum of social business. 36 fo s t e r B US IN ESS

GSEC is a perfect access point, but also an example of Foster’s leadership in the role social entrepreneurship is beginning to play in schools across the world. The different posters and brochures set up around the trade show venue from local Seattle investors, including Microsoft, the Gates Foundation, PATH, and Unitus were an inclusive glance into the role that social enterprise is now taking in the business world. This year’s competition contained business plans that covered a wide variety of genres, including sustainable aquaculture in Tanzania, rural healthcare in India, pedal-powered telephones in Nicaragua, and anti-counterfeiting technology in West Africa. But it was the team members—each coming from a background that complemented other members’ skills to create a perfect opportunity for sustainable management—who made the competition so memorable. Every person involved contributed to the overarching enthusiasm that persisted throughout the week, which was especially noticeable at the banquet where prizes were announced. The teams were able to present their business plans in front of all the participants one last time, but mainly focused on their experiences throughout the competition and the opportunity to meet like-minded individuals who wish—and have the power—to change the world. In parting, I’d like to share a GSEC acronym created by the UW team MiNGO, an enterprise that focuses on building donor networks of ex-international volunteers to financially support their host NGOs in Latin America: G for great experience, S for support, E for educate, and C for cash! The GSEC week is all the proof anyone needs that the world of business is transitioning toward an era of economic development via socially responsible and sustainable business practices. With the Foster School at the leading edge of supporting start-ups such as the teams found at GSEC, it’s impossible not to become excited about social entrepreneurship! n

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Foster Business Magazine Spring 2009  

In this issue: Executive MBA turns 25. Also: Q&A with former Starbucks President Howard Behar

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