Simon Business Magazine - Pixelpunk

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION / SUMMER 1998

Women and

the M.B.A.

. . . at

Simon they mean

business SIMON’S NEW M.D./M.B.A PROGRAM · COMPETITIVE AND ORGANIZATIONAL STRATEGY ·

FUJI XEROX CEO ON JAPANESE REFORMS

In 1991, the Simon School initiated a series of lunchtime intercultural seminars presented by

simonbusiness

William E. Simon Graduate School of Business Administration

contents

students from different countries around the world. Seven years later, the immensely popular Broaden Your Horizons Seminar Series continues to help Simon students develop a true spirit

Summer 1998

2

a message from the dean

of cooperation and unity as they discover new ways to look at their world. By learning more

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their classmates’ home countries, students devel-

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During the past year, Broaden Your Horizons has included presentations by students

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99 series will likely include presentations on the

Organizational

Strategy

area profile Competitive and Organizational Strategy (STR)— A Cutting-Edge Concentration at Simon Although still a relatively young area of study at Simon, STR is already proving itself to be one of the most popular!— by Nadia Bolalek

People’s Republic of China, Turkey, the Republic of the Philippines, South Korea and

t

in memoriam

and

William H. Meckling 1921-1998 Generous, inspiring, principled, intellectually curious, supportive, persuasive, flexible, idealistic...simple words, such as these, cannot fully describe the man who made such a lasting impression on the Simon School. But they offer a place to start...

place.

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the United States.

upfront Kauffman Internships Established • Simon Ranks Again in U.S. News & World Report Survey • Bittner Professorship Announced • School to Establish New M.D./M.B.A. Program • Reaccreditation for Simon • Faculty Recognition • Marketing Case Competition Focuses on Teamwork • First Annual Consulting Case Competition • Research for the Real World • And More

economies, politics and business protocols of

from Brazil, India, Israel and Japan. The 1998-

define yourself in today’s business world. 10 Competitive

about the unique aspects of the cultures,

op a clearer understanding of the global market-

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cover story

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Women and the M.B.A.— At Simon, They Mean Business! The women of Simon—students and alumnae— share their perspectives on how the Simon M.B.A. helps lead the way to success.—by Vicki Brown

At left, Ayako Kanayama ’98 demonstrates

the traditional Japanese tea ceremony for her classmates.

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feature Commencement 1998 James S. Gleason ’68 addresses students, accepts David T. Kearns Medal of Distinction

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B.

A. B. C. D. E.

Cover Photo: Patricia Matthews ’98 Mengdan Chu ’98 Shannon Masten ’98 Maria Alegre ’98 Melissa (Lisa) Morris ’98

Will Japan Reform? Fuji Xerox CEO examines Japan’s financial woes and offers solutions for a more economically-sound Japan.

C. D.

A.

E.

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feature

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feature Reflections on the Big Board Former New York Stock Exchange CEO John Phelan recalls his years on Wall Street.

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DEAN: Charles I. Plosser

A MESSAGE FROM THE DEAN

ASSOCIATE DEAN FOR ACADEMIC AFFAIRS: Ronald W. Hansen

This issue of Simon Business—featuring women and

ASSOCIATE DEAN FOR EXECUTIVE PROGRAMS: Richard M. Popovic

the M.B.A. degree—follows upon the historical cele-

ASSOCIATE DEAN FOR M.B.A. PROGRAMS AND DEVELOPMENT: Charles W. Miersch

Seneca Falls, N.Y., this past July. Hillary Rodham

ASSOCIATE DEAN FOR OPERATIONS: Richard E. West

women from all over the world in commemorating

bration, “Celebrate ’98,” observed near Rochester in

Clinton, the First Lady, was joined by dignitaries and

the 150th anniversary of the first women’s rights con-

CHAIRMAN, PH.D. PROGRAM: Ross L. Watts

The Simon School is proud to have been part of this celebration. As we prepare to enter the next

ASSISTANT DEAN FOR CAREER SERVICES: Lee A. Junkans

millennium, it is only fitting that in this region of the country so rich in women’s history, the Simon School

ASSISTANT DEAN FOR INFORMATION TECHNOLOGIES: Kevin Brennan

DIRECTOR OF ALUMNI RELATIONS AND DEVELOPMENT: Dorothy Drahzal DIRECTOR OF PUBLIC AFFAIRS: George M. Tomczyk DIRECTOR OF STUDENT AFFAIRS: Donna Lampen Smith

Kauffman Internships: Simon Students to “Learn the Ropes” From Entrepreneurs

vention.

ASSISTANT DEAN FOR ACADEMIC AFFAIRS: Stacey R. Kole

ASSISTANT DEAN FOR M.B.A. ADMISSIONS AND ADMINISTRATION: Pamela A. Black-Colton

UPFRONT

continues to support the goals and initiatives of women pursuing excellence. Our cover story offers perspectives from some Simon women—students and alumnae—who are doing just that. As part of the Simon School’s continuing Frederick Kalmbach Executive Seminar Series, we were very fortunate this past spring to host visits by some of the world’s leading executives, including John Phelan, former head of the NYSE, and Yotaro Kobayashi, chairman and CEO of Fuji Xerox Co., Ltd. We are pleased to share their insights into the history of the New York Stock Exchange and on the possible future of the Japanese economy.

EXECUTIVE EDITOR: George M. Tomczyk EDITOR: Nadia Bolalek CONTRIBUTING WRITERS: Vicki Brown, Barbara Ann Clifton ART DIRECTOR/DESIGNER: Michael T. Johnson PRODUCTION MANAGER: Dawn S. McWilliams PHOTOGRAPHER: Cover photograph: John Myers Photography CONTRIBUTING PHOTOGRAPHY: John Myers Photography, Jan Regan, David L. Sanford

On a somber note, we were deeply saddened this past spring by the death of William H. Meckling, dean emeritus of the Simon School. Bill’s remarkable influence on the

© 1998 William E. Simon Graduate School of Business Administration, University of Rochester

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SIMONBUSINESS / Summer 1998

work in start-up companies and see how the principles of entrepreneurship may be applied.” Doyle added that he was “delighted to be a part of the program.” In announcing the grant, Dean Charles I. Plosser commented: “The Simon School has historically taken an entrepreneurial approach to management. We are extremely pleased that, due to the generosity of the Kauffman Center, we will be able to significantly expand our slate of internships in entrepreneurial settings, which have consistently provided important avenues for Simon students to gain firsthand knowledge of building a business.” In funding expansion of the Simon School’s internship program, the Kauffman Foundation recognizes Rochester’s unique position as a technology center, as well as the School’s commitment to educating the next generation of leading entrepreneurs. While Kauffman Interns will bring business knowledge to small, start-up companies, their primary objective will be to observe and learn the expertise which is critical to the success or failure of a new venture. The Kauffman Center was established in 1992 by entrepreneur Ewing Marion Kauffman, who built a small pharmaceutical firm into a major health care company with more than $1 billion in annual sales at the time of its merger with Merrell Dow. SB

As one of the smallest and youngest top-tier business schools in the country, the Simon School is nevertheless a recognized leader in M.B.A. education, as evidenced by the School’s latest top-25 placement in U.S. News & World Report’s 1998 business school rankings. The annual U.S. News survey, which uses measures of academic quality for its results, has ranked Simon among the top 25 business schools in the U.S. since 1990. This standing, coupled with a continuing increase in recruitment activity and corporate recognition of School programs, has made Simon a front-runner in meeting today’s growing demand for well-trained M.B.A. graduates. The Simon School currently provides 444 full-time students with a high-caliber M.B.A. program. In March of this year, U.S. News & World Report ranked the School 16th overall in placement success, with 98.7 percent of all stu-

dents in the Class of 1997 being employed within three months of graduation, and receiving a median base salary offer of $66,000. The survey recognized the School’s worldrenowned faculty and integrated academic approach, with five specialty areas ranking among the 25 best in the country. These areas include accounting, finance, general management, management information systems and product/operations management. The Simon School excels in these areas due to a cross-functional, integrated academic approach led by a diverse, research-oriented faculty working on the cutting edge of management education. Students are continually exposed to individual and collective research on modern management issues, trends and practice, which gives them first-hand access to research shaping their areas of specialization. SB

development of the Simon School and its world-class faculty stands as a remarkable tribute to his legacy—a legacy which we share with you in this issue. In our ongoing area profiles, we highlight the Competitive and Organizational Strategy (STR) area— fairly young, but already firmly positioned as an excellent vehicle for students seeking successful careers in general management or consulting. This issue of Simon Business offers a stimulating blend of current business topics, news and feature stories. We hope you share our enthusiasm, and welcome your comments.

SIMONBUSINESS, Vol. 14, Number 2 © 1998. Published semi-annually by the University of Rochester, William E. Simon Graduate School of Business Administration, Carol G. Simon Hall, Box 270100 Rochester, New York 14627-0100. Postmaster: Send address changes to the William E. Simon Graduate School of Business Administration, Carol G. Simon Hall, Box 270100, University of Rochester, Rochester, New York 14627-0100.

In June, the Simon School announced the establishment of the Kauffman Entrepreneurial Internship Program, made possible by a $25,000 renewable grant from the Kauffman Center for Entrepreneurial Leadership (CEL) at the Ewing Marion Kauffman Foundation. The new internship program will enhance the Simon School’s already strong emphasis on entrepreneurship in the M.B.A. curriculum by offering, within a new course, internships with start-up, high-tech firms. The internships will match second-year students (to be known as Kauffman Interns) with Rochester, N.Y.-area companies, where these students will work closely with CEO’s and top managers. The program will be directed by James N. Doyle, an adjunct professor at the Simon School, and a noted consultant and lecturer on entreprenuership, marketing and general management. Selection criteria for interns will include excellence in introductory coursework in entrepreneurship and a serious interest in pursuing an entrepreneurial career. Doyle called the Kauffman grant a “great opportunity for students who are selected as Kauffman Interns to learn more about the entrepreneurial process. They will be able to

Charles I. Plosser Dean and John M. Olin Distinguished Professor of Economics and Public Policy

Simon Ranks Again in U.S. News Survey


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Simon School Announces New M.D./M.B.A. Program

“The new Simon M.D./M.B.A. program will train the next generation of physicians to manage in the best interests of patients, health care organizations and the medical community.”

Simon School Earns Reaccreditation

AA CS B 4

Jerold L. Zimmerman Named Bittner Professor

UPFRONT

UPFRONT In an effort to educate a new generation of health care leaders expert in both the medical and economic aspects of health care, the Simon School has announced its intention to establish an M.D./M.B.A. program. The program is the product of a collaboration between the Simon School and the School of Medicine and Dentistry, also at the University of Rochester. The Simon School’s new M.D./M.B.A. program offers students an opportunity to achieve both degrees within five calendar years—one year less than the time needed to complete both degrees independently. The program differs from other M.D./M.B.A. programs in curriculum design; candidates spend their first year in the program as full-time M.B.A. students at the Simon School. During the second and third years, they are full-time medical students, but spend the summer between those two years participating in a health care administration internship, assigned to an accomplished mentor working in health care administration. The final two years intersperse advanced business classes with the medical school elective curriculum. “This program will accept a very select group of individuals with great promise and academic credentials, and train them to be able to shape the future of our health care system as leaders of major health care enterprises,” said Edward M. Hundert, M.D., senior associate dean for medical affairs at the University of Rochester School of Medicine and Dentistry.

Heralded as one of the premiere graduate business schools in the country, the Simon School was once again recognized for its outstanding M.B.A. programs. In 1998, the School was reaccredited for its master’s and doctoral programs in business by the AACSB—The International Association for Management Education. The School has been accredited by the AACSB since 1966. The Simon School’s M.B.A. programs are among 324 to be accredited out of approximately 600 such programs in the country. AACSB, AACSB, aa not-for-profit not-for-profit organization organization whose whose members members are are devoted devoted to to promoting promoting and and improvimproving ing higher higher education education in in business business administration administration and and management, management, is is the the only only accrediting accrediting agency agency authorized authorized by by the the federal federal government government to to review review and and certify certify M.B.A. M.B.A. programs. programs. To To achieve achieve accreditation, accreditation, aa business business school school must meet a wide range of mission-linked, must meet a wide range of mission-linked, quality quality standards standards relating relating to to curriculum, curriculum, faculty faculty


“This presents an opportunity for us to bring to health care physician leaders who also possess business acumen.” “The changes in health care delivery are forcing physicians to pay much greater attention to economic realities,” stated Ronald W. Hansen, associate dean for academic affairs at the Simon School. “Many of them are finding they lack the requisite management skills to respond to these changes. The new Simon M.D./M.B.A. program will train the next generation of physicians to manage in the best interests of patients, health care organizations and the medical community.” The new M.D./M.B.A. program follows the Simon School’s announcement in 1997 of a unique M.B.A. concentration in Health Care Management, among the first of its kind to focus primarily on management issues. The concentration is unique in that it helps students to understand how incentives influence and alter behavior among different entities in health care. Subject to New York State Education Department approval, the first class of M.D./M.B.A. candidates will start in September of 1999. SB Application forms are available from John Hansen, Application forms are available from John Hansen, professor of neurobiology and anatomy, professor of neurobiology and anatomy, University of Rochester, School of Medicine and University of Rochester, School of Medicine and Dentistry, 601 Elmwood Avenue, Box 603, Dentistry, 601 Elmwood Avenue, Box 603, Rochester, N.Y. 14642-8603 Rochester, N.Y. 14642-8603 (716) 275-6965; E-Mail: John_Hansen@ (716) 275-6965; E-Mail: John_Hansen@

Simon School Announces Bittner Professorship

“The Bittner Professorship celebrates Mr. Bittner’s many distinguished contributions to Frontier Corporation, the Simon School and University, his family and the Rochester community.” – Jerold L. Zimmerman

urmc.rochester.edu. urmc.rochester.edu.

resources, admissions, degree requirements, library and computer facilities, financial resources and intellectual climate. During the most recent reaccreditation process, three business school deans with detailed knowledge of management education evaluated the Simon School. In their report, the deans praised the School’s proven economics-based framework for solving problems, high-quality student body, impressive placement results and worldrenowned faculty, both as researchers and teachers. This accreditation, which encompasses more than 30 years of the School’s history, is extremely important because it enhances the value of the Simon M.B.A. degree in the global marketplace. It also signifies a validation of the School’s programs, and it is a testament to the continuing excellence of Simon’s faculty, staff and students. SB

Ronald L. Bittner

In May of this year, the Simon School received a major contribution from Frontier Corporation to endow the Ronald L. Bittner Professorship in Business Administration. The gift was made in honor of Ronald L. Bittner, former chairman and chief executive officer of Frontier Corporation, who died on August 31, 1997. In announcing the gift, Frontier President and CEO Joseph Clayton noted that Bittner had enjoyed a close relationship with both the University and the Simon School. “It was reflected both in his willingness to serve those institutions, and in the number of University and Simon graduates who are Frontier employees,” he said. “In recognition of the unique role that Ron attributed to the Simon School in the Rochester community, Frontier Corporation has pledged to endow a professorship in his name. The gift will help the Simon School to remain a major force in producing business leaders of the next generation, in the Rochester area as well as throughout the world.” Bittner joined Rochester Telephone Corporation in 1963, remaining with the company—eventually renamed Frontier Corporation—for his entire career. When appointed CEO in 1992, Bittner sought to strengthen Frontier’s position in the long-distance telecommunications market. In 1995, he was the force behind Frontier’s Open Market Plan, introducing the nation’s first competitive market for local telecommunications. A 1978 graduate of the Simon School’s Executive Development Program, Bittner was a member of the School’s Executive Advisory Committee from 1993 to 1994, and had served on the School’s Visiting Committee. In 1993, he became a member of the University of Rochester Board of Trustees. In a tribute to Bittner at the time of his death, Simon School Dean Charles I. Plosser said: “Ron Bittner was a forward-thinking gentleman of great vision and insight, and a great friend and supporter of the School. He may have taken many valuable lessons away from the Simon School; however, we were the fortunate recipients of his invaluable commitment and friendship.” Commenting on the Bittner Professorship, Plosser said “this generous gift by Frontier Corporation will keep Ron Bittner’s memory alive as an inspiration to the entire Simon community.” “This new act of generosity confirms the strong relations between Frontier Corporation and the University,” said University of Rochester President Thomas H. Jackson. “Moreover, it is a singularly appropriate memorial to Ronald Bittner, who by his actions publicly demonstrated his belief in the importance of business education. This gift will help us to sustain a strong program for our students in management.” The Bittner Professorship will be held by Jerold L. Zimmerman, Faculty Chair and professor of accounting, who has been Alumni Distinguished Professor at the Simon School since 1986. SB

Jerold L. Zimmerman, Faculty Chair, professor of accounting and Ronald L. Bittner Professor of Business Administration, has taught at the Simon School since 1974. Zimmerman’s research and teaching interJerold L. Zimmerman ests involve accounting and the economic theory of organizations. His research in accounting reached a milestone in 1986 with the publication of Positive Accounting Theory (a book co-authored with Ross L. Watts). His honors and awards include: the American Institute of Certified Public Accountants Award for Notable Contribution to the Accounting Literature (in 1979 and 1980, for papers with Ross L. Watts); the Alpha Kappa Psi Foundation Award for Distinguished Service and Achievement in Accounting, for his book with Ross L. Watts; and the American Accounting Association’s 1978 Competitive Manuscript Contest Award. Zimmerman’s work has been internationally recognized and acclaimed. He is the author of the recently published Accounting for Decision Making and Control, which has been described as the “first managerial accounting textbook to really emphasize how accounting is used for management.” He also co-authored (with James A. Brickley and Clifford W. Smith Jr.) Managerial Economics and Organizational Architecture, and he is the author of a new undergraduate accounting text, Managerial Accounting. Zimmerman, who received his Ph.D. from the University of California at Berkeley, is a founding co-editor of the Journal of Accounting and Economics, one of the most highly referenced publications in accounting. He was also a distinguished faculty member of the American Accounting Association’s Doctoral Consortium.


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UPFRONT

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Simon School Faculty Recognized for Outstanding Work During 1998, Simon School professors were recognized for their outstanding contributions within their professional areas of expertise. Once again, they have proven that the Simon School’s widely-recognized faculty is the lifeblood of the M.B.A. program, and at the heart of each student’s opportunity to succeed.

Ball Honored By American Accounting Association

Professors Win Best Paper Award For New Design Methodology

Ray Ball, Wesray Professor of Business Administration and professor of accounting, was selected as the American Accounting Association’s (AAA) Distinguished International Visiting Lecturer in Accounting for 1999. The American Accounting Association’s Distinguished Lecturer in Accounting Program has been supported since its inception by the Exxon Controllers Grant. The series enables a distinguished professor from the U.S. or Canada to lecture at universities in a specified area of the world, and a professor from abroad to lecture for two days at universities in the U.S. Ball is considered the world’s leading authority on the economic analysis of accounting and its linkage to the financial markets, and is widely credited with having changed the nature of accounting research. As Distinguished Visiting Lecturer in Accounting, he will be invited to speak at eight universities in South America in 1999. According to representatives of the American Accounting Association, Ball was selected for his “teaching, research and service, which have helped to promote worldwide excellence in the creation and dissemination of accounting knowledge.” Selections of Distinguished Lecturers and the universities they visit are made by the American Accounting Association’s Distinguished International Faculty Exchange Committee, appointed by the

In January of 1998—the second time in just over two years—two Simon School professors in computers and information systems won top honors from their peers and computer industry professionals. Rajiv M. Dewan and Abraham Seidmann won the 1998 Thirty-First Hawaii International Conference on System Sciences award for the best research paper in the Collaboration Systems and Technology Track. The prestigious award was presented in a ceremony sponsored by the University of Hawaii College of Business Administration at the HICSS in

High School Students Rise to “The Challenge”

High school students participating in “The Challenge.”

The Simon School Minority Business Students Association (MBSA) held its fifth annual Business and History High School Challenge on March 7, 1998. This year’s event, cosponsored by Eastman Kodak Company; The Chase Manhattan Bank; Citibank; Mobil Chemical Foundation; Wegmans Food Markets, Inc., and the University of Rochester, drew over 40 participating high school students from the Rochester, Syracuse and Buffalo metropolitan areas. The Challenge, which is patterned after TV’s “Jeopardy,” was started by the MBSA in 1993 and is an academic competition on African-American and HispanicAmerican contributions to U.S. history and business. The annual event helps motivate minority high school students to take pride in their heritage and to understand the value and importance of education. Each member of the first place winning team received a $2,500 scholarship to attend the university of their choice. (If winners choose to attend the University of Rochester, scholarship monies become renewable.) SB

Simon School Holds First-Ever Consulting Case Competition Co-sponsored by the Simon School, Service-Master Management Services and American Management Systems Inc. (AMS), the first-ever Simon School Consulting Case Competition was a hit—even earning mention on the front page of The Wall Street Journal! (March 26). Patterned after Simon’s successful Marketing Case Competition, the Consulting Case Competition focused on

Simon Marketing Case Competition Focuses on Teamwork

(continued on page 30) Rajiv M. Dewan

Kohala, Hawaii. The recipients were determined by an extensive peer review process, and an anonymous vote by senior practitioners and academicians. Dewan is assistant professor of computers and information systems at the Simon School, and Seidmann is Xerox Professor of Computers and Information Systems and Operations Management. Dewan and Seidmann shared the award with their co-author, Zhiping Walter, a Simon School Ph.D. graduate and faculty member at the University of Connecticut School of Business, for their paper, “Workflow Optimization Through Task Redesign in Business Information Processes.” Dewan, Seidmann and Walter examined business process design, with a focus on redesigning and consolidating tasks—in other

A number of M.B.A. students from some of the top business schools in the country had the opportunity to put their marketing skills and talents to the test on April 18, 1998, at the Simon School, as they competed in the fifth annual Simon Marketing Case Competition. The competition case material involved a real-world international marketing strategy challenge for a highly technical medical instrument made by Ortho-Clinical Diagnostics, a subsidiary of Johnson & Johnson. The winning team, consisting of students from the Simon School and the business schools at Cornell University, Northwestern University and Yale University, shared a $2,500 cash prize. Besides the schools representing the winning team, this year’s event also drew students from the business schools at Carnegie Mellon, Columbia, Georgetown, Michigan, Pittsburgh, Purdue and Washington Universities. The annual event is designed to provide perspectives on realworld marketing problems and the solutions devised by marketing managers. This year’s competition was co-sponsored by Johnson & Johnson, the Simon Marketing Association (SMA) and VISION, the student-managed portion of the Simon School’s M.B.A. program. SB

the support services and facilities management market. Teams made up of M.B.A. students from business schools around the nation were given six hours to read and discuss the organizational strategy issues facing Service-Master, the country’s leading facilities management company. A team comprised of students from business schools at the University of Rochester, Emory University, Georgetown University and the University of Chicago won the competition. Students from Cornell University, Yale University, the University of Pittsburgh and the University of Texas—Austin also competed.

(continued on page 30)

SB

Ray Ball

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Marketing Case Competition: the winning team


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IN MEMORIAM

William H. Meckling 1921-1998 William H. Meckling, dean emeritus and

But they offer a place to start…

former James E. Gleason Distinguished Research Scholar in Management and Government Policy, died May 15 at his home in Rancho Sante Fe, Calif., after an extended illness. He was 76 years old. Widely recognized for his leadingedge efforts in both research and teaching, Meckling brought notoriety not only to himself, but also to the institutions and causes he served. Few people have the opportunity, let alone the ability, to create something of enduring value. Meckling not only had the talent and the wisdom to envision great things for the Simon School, but he had the determination to parlay those dreams into lasting contributions that would earn the institution its rightful place among the top business schools in the country. When Meckling arrived at the College of Business Administration (as it was known at the time), it was still primarily an undergraduate and evening school. The year was 1964, and the part-time faculty and students far outweighed the number of people involved with the program on a full-time basis. Meckling, whose keen visionary sense recognized the need for change, immediately began to recruit a first-rate faculty that would allow the School to attract the best students and sharpen the existing curriculum. Julian Keilson, one of the dozen full professors hired at the time by Meckling, remembers how the late dean was persuasive in pulling together such a powerful faculty, many of whom still teach at the School. “There was a massive influx of talent that made up a small senior army of pro-

“The consummate scholar who was constantly probing and questioning, and always stimulating each of us to produce the best work possible.”

“His strong belief in intellectual honesty and rigor played a significant role in the development of all the young faculty he recruited, myself included.”

Generous...Inspiring... Intellectually Curious... Principled...Idealistic... Flexible...Persuasive... Supportive... Simple words, such as these, cannot fully describe the man who made such a lasting impact on the William E. Simon Graduate School of Business Administration.

—Jerold L. Zimmerman, Simon School professor of accounting and Ronald L. Bittner Professor of Business Administration 8


—G. William Schwert, Simon School professor of finance and statistics and Gleason Professor of Business Administration

fessors recruited by Dean Meckling,” recalls Keilson, now senior research associate and professor emeritus of operations research at the Simon School. “I had been a little puzzled, because I had been a scientist, a physicist and an electrical engineer all my life, and I wasn’t quite sure I belonged at a business school. But Meckling convinced me he wanted me to be part of what he envisioned as one of the strongest quantitatively-oriented business schools in the country. I was honored to be included and readily accepted his offer.” While Meckling gathered around him some of the country’s most influential business minds, he also set about shifting the emphasis of the School from parttime study to full-time programs, and from adjunct faculty and instructors to full-time professors whose main function would be teaching and research. During his nearly two decades at the School, he was responsible for initiating some of its most fundamental components, including the Ph.D. Program in Business Administration and the Executive Development Program. Under his leadership, the Simon School first earned AACSB accreditation for the M.B.A. program and became a member of The Consortium For Graduate Study in Management. Meckling was also responsible for establishing the School’s Center for Research in Government Policy and Business, now known as the Bradley Policy Research Center. Perhaps one of the things he will be best remembered for, however, was his desire to firmly ground the institution in

an economics-based approach to business management. As an economist, Meckling developed a viewpoint for the School that would be shared by generations of faculty members and thousands of M.B.A. candidates. Marshall Freimer, associate professor of applied statistics, management science and operations management, recalls that when he began working with Meckling, their professional views weren’t always quite the same. Yet he says Meckling’s style of management was flexible and allowed faculty members a certain amount of freedom to flourish within their designated areas of expertise. “Meckling and I sort of looked at the world a little differently, but he let me fit in the best I could,” says Freimer. “As a mathematician, it took me a little longer to come around and accept that his economics approach was the right way to do things. Finally, though, it sunk in that he was absolutely right. He was patient with me, and I certainly appreciated that.” He adds, “Meckling made the School relatively coherent in the way it views things—that is, an understanding of economics is the way to understand the business world—because before him there was no such coherent view. Back then, everybody looked at the world from individual viewpoints. People were doing their own thing, and there were a lot less people talking to a wide variety of colleagues. Finally, everyone came around to recognizing that an economics viewpoint made the most sense, and they realized they could talk the same language to anyone here.”

A native of Pennsylvania, Meckling earned his bachelor’s degree from Westminster College in 1942, and was awarded an honorary Doctor of Science degree from the same institution in 1978. He earned his M.B.A. from the University of Denver in 1947, pursued graduate studies in economics at the University of Chicago from 1949-1952, and received an honorary Doctor of Social Science degree from Francisco Marroquin University in Guatemala in 1980. From 1952-53, he was a faculty member at Butler University in Indianapolis, then he served two years as assistant director of the Indianapolis Bureau of Governmental Research. In 1955, he was brought on board at the RAND Corporation in Santa Monica, Calif., and eight years later he joined the Center for Naval Analyses in Arlington, Va. He also served as executive director for the President’s Committee on the AllVolunteer Force (the “Gates Commission”) which had a dramatic impact on the termination of the draft and the implementation of a realistic pay scale to attract adequate volunteers to military service. As a pioneer of research in the areas of managerial economics and the economic analysis of law, Meckling profoundly influenced the thinking of many of today’s leading corporate executives and business scholars. His groundbreaking work with Michael Jensen on agency theory is part of the foundation of the Simon School’s economics-based approach to management education. Their collaborative efforts brought the

pair widespread recognition and formal honors, including the first Leo Melamed Prize for their paper “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” (Journal of Financial Economics) in 1979. That same year, the Financial Analysts Federation awarded them the Graham and Dodd Plaque for their paper, “Can the Corporation Survive?” (Financial Analysts Journal), which was judged the best manuscript published in 1978. Walter Oi, Elmer B. Milliman Professor of Economics, says he had great respect for Dean Meckling’s awardwinning work. “Very few professors who become deans continue to teach or to publish,” he says. “Meckling was among that tiny minority. He was responsible for a flow of research that was at the forefront of the discipline. He somehow managed to begin a line of research resulting in the field of organizations and markets while he simultaneously assembled a first-rate faculty and expanded the student enrollment at the renamed Graduate School of Management.” Most undoubtedly, the true impact of Meckling’s life is found deep in the hearts and minds of the people who were fortunate enough to know him well. In a tribute to Meckling, Dean Charles I. Plosser said, “Bill’s memory at the School and University will live on for a long time to come. I remain in awe of his accomplishments, his integrity, but most of all how he enjoyed it and made it all look so easy. Bill was a friend and mentor to many, and he will be deeply missed.” SB

“Bill Meckling had an obsession to develop a business school devoted to the rigorous analysis of real business problems.”

“He had an incredible talent for attracting bright young faculty, nurturing their development, and continually challenging us to push the boundaries of business scholarship.”

“Bill was a wonderful man, with solid convictions and the personal strength to fight for them. We will miss him.”

“More than any single individual, Bill Meckling was responsible for defining the character of this institution.”

—Ross L. Watts, Simon School professor of accounting, Rochester Telephone Corporation Professor and current chair of the Simon School’s Ph.D. Program

—Clifford W. Smith Jr., Clarey Professor of Finance and Economics

—Allan H. Meltzer, Carnegie Mellon University Graduate School of Industrial Administration professor of political economy and public policy

—Charles I. Plosser, Dean


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Competitive and Organizational

UPFRONT feature

Strategy (STR) concentration faculty

Competitive and Organizational Strategy— A Cutting-Edge Concentration at Simon Successful managers are those who can consistently respond to business challenges and opportunities with innovative and implementable solutions and strategies. The Simon School’s economicsbased approach to management education provides exactly this set of capabilities. This is especially evident in the School’s Competitive and Organizational Strategy (STR) concentration, which is designed specifically to enable students to respond to unstructured and multifaceted opportunities in bold, profitable ways. Launched in the fall of 1995, the

graduates. The flow of offers, and the salary levels, tell us recruiters are impressed with what they see.” MacDonald says that since being introduced at Simon, the concentration has grown significantly in popularity— tied for second with marketing (after finance) in attracting the largest number of students. “When we reformulated the STR concentration, we were already offering a terrific set of general management skills, but not making the connection to particular careers very effectively. Our new, explicit focus on consulting and general management has allowed

—by Nadia Bolalek

fact that adoption and successful implementation of decisions based on good analysis demand clear and intuitive communication with other decision makers, including both those who bear ultimate responsibility for the overall success of the firm, as well as others who must understand the key components of a strategy or decision in order to implement it. The STR concentration’s integrated curriculum delivers the appropriate depth and diversity of knowledge, while emphasizing a carefully-selected set of communications skills.”

include, from left: Ronald M. Schmidt, professorial lecturer and chairman of the Faculty Committee on International Exchange Programs; Stacey R. Kole, assistant dean for academic affairs and assistant professor of economics and management; James A. Brickley, professor of economics, management and finance; R. Lawrence Van Horn, assistant professor of economics and management; Leslie M. Marx, assistant professor of economics and management; Glenn M. MacDonald, professor of economics and management and area coordinator, competitive and organizational strategy. Not photographed: Oliver M. Richard, assistant professor of economics and management; Michael D. Ryall, assistant professor of

“The ability to produce the logical, fact-based analyses that are the hallmark of the successful consultant or general manager, naturally requires a deep and integrated understanding of the many dimensions of business.” Competitive and Organizational Strategy concentration was developed in response to the demands of the marketplace, according to area coordinator Glenn M. MacDonald, Simon School professor of economics and management, and STR area coordinator, who led the effort. “In reshaping the concentration, we explored the needs of employers, along with the Simon School’s capabilities to train students to meet those needs. We then designed a curriculum tailored to developing students who would be successful in both consulting and general management.” He adds, “Recruiters have taken a close look at our STR 10


our faculty to make substantial and innovative modifications to the curriculum, as well as help students focus on exactly what they need to do to have successful careers in consulting and general management. The explosion of interest in the STR concentration—both by students and potential employers— tells us we are headed in the right direction.” MacDonald adds that “the ability to produce the logical, fact-based analyses that are the hallmark of the successful consultant or general manager, naturally requires a deep and integrated understanding of the many dimensions of business. But almost as important is the

Exploring the curriculums of other leading business schools, MacDonald says that although many may claim to offer consulting or general management tracks, none compare to what is offered at the Simon School. Students in the STR concentration at Simon begin with core training in economics and the basic functional areas. Additional courses then integrate this know how and apply it in a variety of contexts, including product-level issues such as pricing and advertising, organizational topics such as compensation, job design and performance evaluation, and the broad, firm-level topics addressed by corporate finance. Finally,

economics and management.

courses in game theory and strategy complete the integration process and bring the student to the high level of strategic sophistication needed for general management and consulting. According to MacDonald, the Simon School’s small size plays a key role in its ability to provide a business education that is based on solid fundamentals, while staying highly current and applicable. “At the larger business schools, maintaining a suitable degree integration across areas, and consistency among many sections of courses, makes it practically impossible for faculty to respond to new developments in a timely manner. Our size allows us to make adjustments quickly without compromising the central features of the School’s approach to management.” In addition to the economics-based framework and size advantage offered at the Simon School, MacDonald credits his colleagues’ path-breaking research as

instrumental in achieving the objectives of the area’s curriculum. “Our faculty is involved in innovative and applicable research. And nowhere are students exposed to the best of these new ideas in a more timely manner; sometimes we even present ideas from ongoing Ph.D. research. This level of novelty and currency in the curriculum can only be delivered effectively when there is a common, fundamental set of ideas, and the program is small enough to avoid being cumbersome.” MacDonald says that, for the same reasons, STR will continue to undergo refinement and improvement. “The next five years will bring exciting changes to the concentration as we look at expanding the curriculum, recruiting additional faculty and continuing our research,” he says. “Those initiatives, coupled with Simon’s continuing reputation for excellence, will add greatly to the success of our graduates.” SB

“The STR concentration’s integrated curriculum delivers the appropriate depth and diversity of knowledge, while emphasizing a carefully-selected set of communications skills.”


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UPFRONT

Research for the Real World Document Technology Structures Workflow

Dewan

Seidmann

Technology continues to change the world in which we live. Each day it seems we’re introduced to faster, easier and, ostensibly, better ways of doing things. The same holds true in the business world: Technology continues to change the ways in which we conduct and organize business. Digital document technology, in particular, has come to play a major role in the changes currently sweeping document management areas of businesses, according to a new paper by Simon School professors Rajiv M. Dewan and Abraham Seidmann, and Zhiping Walter, a Simon Ph.D. graduate who is now a faculty member at the University of Connecticut. But how does a company fully realize the benefit of new document management technologies? Do other internal processes need to be adjusted? Do organizational changes need to be made as well? These are some of the questions the authors answer in their paper, “Digital Document Technology Selection and Workflow Optimization,” as they take a close look at the connection between document management

The Simon School’s renowned faculty continues to prove business research is alive and well beyond the classroom, as noted in the following research summaries.

technologies and the design of work processes to optimize efficiency. The authors focused their interests on those businesses where “paper flow is a large part of the business process,” according to Dewan, assistant professor of computers and information systems. “Health care organizations, insurance agencies—any business where customers send in pieces of paper to be processed, reviewed, and analyzed—are examples of the types of businesses we examined in our research,” Dewan explains. “In this context, we show the joint benefit of technological and organizational improvements. We show that the value of technological changes is enhanced by concomitant changes to the flow of work within the organization.” Seidmann, Xerox Professor of Computers and Information Systems and Operations Management; and area coordinator, computers and information systems and operations management, adds: “Our research was motivated by the observation that many companies do not know how to select the appropriate document management technology for their core transac-

“...the value of technological changes is enhanced by concomitant changes to the flow of work within the organization.”

Contingent Workers Add Flexibility to Workforce

Pinker

12


tion-processing activities. At times, we show that best results can be achieved when process changes and document redesign are an integral part of the technology upgrade activity.” By adjusting or redefining the workflow, Dewan says that a company can then realize maximum efficiency within its internal work processes when applying new technologies such as image-based document management systems. Such systems allow far greater flexibility in routing and assigning work to multiple decision makers in parallel. This technical ability combined with new theories of contingent decision making in organizations creates maximum benefit for the firms. The authors also examine a related issue of the design of documents to enhance performance. “The design of a document depends on the type of electronic document management system (EDMS) adopted,” Dewan says. “We classify EDMS into three basic types according to the format and the structure of documents supported by these systems: (1) image-based, (2) text-based, and (3) structured-documentbased.” Image-based documents show an image of an original document. Some credit-card companies (American Express, for example) send their customers images of transactions and/or charges. Introduced in the 80’s, Dewan says image-based documents have been the most widely used form of document management to date. With the advent of the Internet, structured

documents are slowly gaining in popularity and widespread use. “A structured document is a document which has its contents divided into smaller sections which can each be worked on independently, which means more of the processing of these documents can be automated,” Dewan explains. “It is possible to create custom documents for each decision maker that has just the information that he or she needs to make a decision. This improves the efficiency of the process and allows greater flexibility in workflow organization. This is where we are seeing the biggest change in the document processing—the increasing structure of electronic documents.” According to Dewan, the researchers modeled the document management workflow and the impact these new digital technologies have on that workflow. They then formulated a novel mathematical problem to choose the best combination of work design and technology choice to do the most to increase efficiency in work processes. “Often times this choice will result in large changes in existing document technology that as a result, may go hand-in-hand with large organizational changes that would include things like new decision rights, or perhaps employee empowerment,” Dewan says. Seidmann believes that this research provides practical guidelines for management consultants and systems integrators who are looking for a more structured way to evaluate hightech solutions for their customers and staff. SB

Contingent (or flexible) workers are casting a new hue on the complexion of America’s workforce. How and when to use them is a key issue facing today’s managers. Throughout the economy and especially in services, firms are relying on flexibility in the form of temporary, on-call, contract and part-time workers. To determine the appropriate use of contingent workers—perhaps one of management’s most complicated tasks—managers must be able to understand how fluctuations in demand for their firms’ goods and services affect their own demand for labor, and how they choose to supplement their workforce. Only with such an understanding will managers be able to quantify the flexibility benefits of contingent workers and develop an overall staffing strategy.

In their new paper, “Optimal Staffing Strategies: Use of Temporary Workers, Contract Workers and Internal Pools of Contingent Labor,” Edieal J. Pinker, assistant professor of computers and information systems at the Simon School, and Joseph M. Milner, assistant professor of operations management, at Washington University, take a unique look at the variables managers need to consider in deciding how and when to effectively supplement company staffing with contingent workers. According to Pinker, demand volatility lies behind many of the reasons companies typically cite for opting to use contingent workers: (continued on next page)


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UPFRONT

• Contingent workers can supply specialized skills that a company may need for a specific period, but are not required in their regular employee base. • The use of contingent employees can satisfy “headcount” limits. • The use of contingent workers can buffer “core” employees from demand shocks.

“Managers typically have a very hard time understanding uncertainty, and how to manage resources to deal with the uncertainty, and this has become an important skill.”

“Managers typically have a very hard time understanding uncertainty, and how to manage resources to deal with the uncertainty, and this has become an important skill,” Pinker explains. “For example, one traditional way that manufacturing companies have dealt with demand fluctuation is to build inventory. That works fine, but today we live in a world where people try to keep inventory very, very low and that means you need flexibility in other places. “In the growing service industry, however, you can’t build inventory. For example, nurses working in hospitals cannot take the blood pressure of a patient who isn’t there. So, you need to adjust staffing to meet fluctuations in demand.” Pinker says that the problem rests with managers not knowing how to quantify the benefits of flexibility in the labor force—whether it be in terms of the specific hours that people work, being able to have on-call workers, or going to a temp agency when the need arises. “They don’t know how to decide which of those staffing options to use to most efficiently match their labor demand. That’s where we come in,” he adds. In their research, Pinker and Milner analyze the benefits of hiring flexible workers to adjust a workforce to meet changes in labor demand. They primarily focus on the use of flexible workers in service industries, but contend that, in general, most companies have four staffing strategies to consider:

• going to a temporary agency when you have a shortage of workers, and • entering an exclusive arrangement with a temporary agency—a “partnership agreement” in which the agency always provides workers when needed. According to Pinker and Milner, managers need to focus on three environmental factors when trying to determine which staffing strategy to use. For one, if labor demand is predictable and flexibility is not needed, a manager can plan accurately and rely more heavily on full-time workers. The second environmental factor focuses on the availability of appropriate labor, and the final factor, the authors say, is the value added by a unit of labor in the company. These last two factors determine which form of flexibility is most appropriate. Low availability favors formal partnerships with temp agencies. Low value added favors internal pools of contingent workers. “We have built into our model the problem of finding appropriate labor,” Pinker says. “The idea is that if you take workers who are hard to find and are high value added, then typically the best strategy for a firm would be to enter a formal contract with an external provider of labor. Another scenario could be workers who are high value added and very available, for which an entirely different staffing strategy would be more appropriate. It’s up to today’s managers to make the assessment of what their business environment is,” Pinker says, “and use our results to guide them to make the right staffing choice.” SB

Repositioning: A New Life for Old Products

what happens if a product is made more or less

product in a store, or flip through the pages of

dependable; what the effect is on profit and

a magazine and you’re bound to see the words.

sales, and so on.”

They’re everywhere. Perhaps even more so

“It’s a matter of striking the right balance between demand and cost, which, in turn, depend on the prices and attributes of your own as well as your competitors’ products.”

in examining the relationship between particu-

strategies on the rise.

lar product attributes, according to Nelson. sort of subjective attributes—dependability,

tioning strategy—as opposed to total new prod-

comfort, those kinds of things. Consumers tend

uct development—that can entice consumers to

to think that way as well. The catch is, when

buy the bigger, better, tastier and all-around

designing a car, the engineers are not thinking

improved version of their tried and true

that way. They are thinking in terms of prod-

favorites.

uct specs and so on.”

In their new paper, “Multiattribute Demand,

In their paper, the authors have examined

Cost and Competitive Repositioning,” Simon

how these technical specs relate to consumer

faculty members Dan Horsky, Benjamin L.

specs, a concept referred to as “quality func-

Forman Professor of Marketing; Paul Nelson,

tion deployment” or the “house of quality.”

associate professor of marketing, and Jeongwen

“Studying quality function deployment is

Chiang, of Hong Kong University of Science

also done in a very qualitative manner,” Nelson

and Technology, take a closer look at reposi-

says. “Engineers get together and discuss what

tioning strategies in the auto industry and how

the relationships are between the two (technical

particular variables—product attributes and

and consumer specs). What we’ve done is actu-

costs—can make or break their success.

ally use a regression analysis to spell out this

“Companies now realize the role that brand

relationship.”

repositioning can play in increasing demand for

In their study, the authors map the subjec-

their products, especially in this environment of

tive attributes—for example, the performance

international brands and rapid technological

rating of a car—into the physical engineering

change,” says Nelson. “They’ve realized that

attributes, such as the car’s weight and wheel-

relative to new brand development, reposition-

base, steering capabilities and engine specifica-

ing strategies typically involve less cost and easi-

tions.

er market acceptance. Hence, better profits.” According to Nelson, “most product develop-

Nelson

“Marketing professionals tend to think in

attest, it’s often as simple as a product’s reposi-

“Design engineers can then decide which physical attributes to change in order to achieve

ment and marketing ideas are both generated

the desired perceptual location shift with mini-

and evaluated in a largely qualitative manner.

mum cost,” Nelson adds.

“In this paper, we’ve taken a quantitative For copies of the papers reviewed on pages 12-15, please contact the Office of Public Affairs at 716-275-3736 or E-Mail: [email protected]

The research also takes a different approach

nowadays with the globalization of brand And, as advertising and marketing gurus will

Although related research has been done in

approach in examining repositioning. We’ve

the past, Nelson says none matches the com-

developed a methodology to evaluate multiat-

plexity of factors (competitive reaction, attrib-

tribute demand and cost functions for compet-

ute costs, quality function deployment, equilib-

ing firms, which then utilizes these functions to

rium and repositioning) explored by the authors

identify optimal repositioning strategies.”

in theirs.

“Auto makers are now focusing on ‘tinker-

“Brand repositioning can turn out to be

• Taking the traditional approach and just hiring full-time workers with fixed schedules;

ing’ with their existing products to see what

quite profitable, and profits are basically what

effects it will have on consumer demand and

firms worry about,” Nelson concludes. “It’s a

market reaction,” Nelson explains. “And

matter of striking the right balance between

• creating an internal pool of flexible workers;

what’s applicable to our research is the outcome

demand and cost, which, in turn, depend on the

of that tinkering. For example, they can take a

prices and attributes of your own as well as

product attribute like dependability and see

your competitors’ products.”

Horsky

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“New and improved.” Pick up just about any


SB


15

Women ... at

and the

SIMON they mean

Business —

b y

V i c k i

M.B.A. One student had played flute in a symphony. Two had been high school All-Americans in sports, and another had run 70 marathons. A woman from the People’s Republic of China had launched an arts and crafts business with a partner when both were barely past their teen years, turning the equivalent of a $2,000 investment into a success story. Even Alegre seemed to be different from other business students. She not only holds an undergraduate degree in psychology from a university in her native Argentina and two graduate degrees in psychology from the University of Pittsburgh, but has also

“My classmates are all

fortable in an M.B.A. program.” Unfortunately, Alegre points out, too few women with a passion to excel are actually enrolling in top business schools along with their talented male counterparts. As a result, she says, relatively few women are reaping the benefits that often come with earning an M.B.A. degree from a leading school, and relatively few corporations are able to tap what should be a vast pool of potential business talent. While at Simon, Alegre compiled data on female enrollment in the nation’s leading M.B.A. programs, basing her top-20 list on rankings from the U.S. News & World Report

way to top corporate leadership, and the scarcity of women enrolled in these programs is attracting attention nationwide. A consortium of 13 companies—Amoco, Chase Manhattan, Citicorp, Cummins Engine, Deloitte & Touche LLP, Eli Lilly, Equity Group Investments, Ford, Kraft Foods, McKinsey & Co., Motorola, Procter & Gamble, and Whirlpool—is funding a new $260,000 study to determine why women are underrepresented in M.B.A. programs. The University of Michigan and Catalyst, a New York City-based nonprofit organization that works to advance women in the workplace, are conduct-

people with a passion.

All of them have a desire to excel...

B r o w n

COVER story

You can feel that in the air at Simon. That is what you need

When the members of the William E. Simon Graduate School of Business Administration Class of 1998 first gathered two years ago to begin studying for their M.B.A degrees, Maria A. Alegre wondered what her classmates had in common...

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to

feel comfortable

published papers on research in cognitive psychology and won outstanding reviews as a college instructor. In an interview conducted shortly before she graduated from Simon and joined Procter & Gamble’s marketing team in Cincinnati, Alegre recounts that getting to know her classmates allowed her to recognize the common thread that connects them. “My classmates are all people with a passion,” she says. “All of them have a desire to excel, to accomplish something in life. You can feel that in the air at Simon. That is what you need to feel com-

in an M.B.A. program.”

1998 annual guide to graduate schools. The statistical research shows women composed just 29 percent of the 1998 M.B.A. classes at Harvard, Stanford and Yale; 28 percent at the University of Michigan and M.I.T.; 27 percent at Wharton and U.C.L.A., and 23 percent at Simon and the University of Chicago. Only four schools (Berkeley, Cornell, N.Y.U., and Columbia) had percentages of 33 percent or more. The overall average for women in the top 20 M.B.A. programs in the U.S. was 29 percent. The leading graduate business programs are widely regarded as the gate-

ing the study, the most intensive of its kind ever undertaken. A published report is expected in 1999. “The enrollment of women at the nation’s leading business schools has stagnated, even while the enrollments of women in other professional programs, such as law and medicine, mirror the nation’s economic trend toward having nearly equal representation of men and women,” says Catalyst President Sheila Wellington. “It is important to women, the academic community, and the nation to understand why,” she says. (continued on next page)


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“ There is

no question

that I wouldn’t be where I am

if I hadn’t earned my M.B.A.” COVER story

Women of Simon Launch an Aggressive Campaign The same concerns that sparked the nationwide study have also led to a dramatic, though entirely unrelated, campaign at Simon to increase both the number of female M.B.A.’s and

“ You hear women say

ate women, and development of new marketing materials. The mentoring program, which pairs every incoming female Simon student with a second-year female student, begins in fall 1998. Other initiatives planned for the year include bringing in more women speakers to talk about what it takes to “make it” to the top in business; more assistance for alumnae conducting career searches, and a new Web page to promote easy communication between past, current and future women of Simon—including posting of

of women in the Simon community and business world. Laura Illig, a second-year student and the current chair of the organization, found being a member of the 1997-98 forum “a powerful experience.” She says, “we’ll continue what was started last year and add additional value. We want to put even more of a focus on careers and career development—on finding appropriate jobs, networking with other women, and dealing with issues that may come with advancement and career growth.”

there’s a glass ceiling

and you hear CEO’s say there are

‘line’ experience

.

not enough women with

We want to bring in more

women business

how much line experience you need, how much overseas time you need ... ’’ speakers who can address topics like

support for the School’s female students and graduates. The women of Simon are marketing the advantages of a Simon education to a broader audience of young women, stepping-up mentoring for entering female students, and moving quickly to improve networking and support for women after they graduate. The campaign has already included a business women’s retreat, an open house for undergradu-

job openings and résumés. The campaign has been led by Simon’s Classes of 1998 and 1999 under the umbrella of the Business Women’s Forum, a long-standing group at the School that has recently evolved into a strong, dynamic organization composed of students, faculty, staff, and alumni. The forum’s mission is to share programs and information focused on the real issues and concerns

For example, Illig points out, “You hear women say there’s a glass ceiling and you hear CEO’s say there are not enough women with ‘line’ experience. We want to bring in more women business speakers who can address topics like how much line experience you need, how much overseas time you need, or what other skills and attributes women need to demonstrate in order to advance into the executive ranks.”

Competition for Graduates of Top Schools Is “Ferocious” Nationwide the number of M.B.A. graduates has risen dramatically over the past two decades—from 18,000 graduates in 1968, to 50,000 in 1979, to 84,000 in 1992— according to a recent study conducted at Baker University in Kansas. The same study projects there will be 100,000 students graduating with an M.B.A. in the U.S. in the year 2000. “The sheer volume of M.B.A.’s is deceptive, though,” says The New York Times in an August 2 front-page article entitled “A Top M.B.A. Is a Hot Ticket as Pay Climbs.” The Times notes, “The graduating classes of elite schools—the ones being plied with sixfigure offers—have grown little.” “The explosion has happened among the more than 600 programs that do not make it into the top 25 nationally ranked schools.” The same article calls competition for graduates of leading M.B.A. programs “ferocious” as the nation experiences the best economy since the sixties, and a surge in businesses that advise companies on new products, acquisitions or overseas expansion. Simon’s own 1998 graduates, confirms Laurie Clayton, associate director of career services, accepted jobs paying as much as $170,000 in the especially “hot” fields of investment banking and consulting. Clayton says the mean base salary for 1998 Simon graduates was $70,746, with bonuses (e.g., estimated bonus earnings, relocation reimbursement) pushing the mean total package to almost $92,000.

Number of MBA Graduates

•

•

•

100,000 90,000 80,000 70,000 60,000

•

50,000 40,000 30,000 20,000

• 1968

10,000 1979

1992

1998

2000

Sources: Baker University and The New York Times

The fact that women are substantially underrepresented in the M.B.A. programs that most interest corporate recruiters is particularly jarring now, a time when women have advanced on so many other educational fronts. According to a recent Boston Globe article, women now account for over half of all students enrolled in post-secondary education, earn more than half of all bachelor’s and master’s degrees, and are expected to exceed the number of males earning doctoral degrees in about 10 years. Other sources point out that female enrollment in medical and law schools, once dominated by men, is now routinely over 40 percent and that women have been entering such traditionally male-dominated fields as engineering in increasing numbers. A top-level administrator at the University of Michigan business school, lead school for the new national study, has said he suspects programs for mas-

ter’s in business administration are not as appealing to women for several reasons. He includes in his list the perceived “glass ceiling” at large corporations, an increase in the number of women who are becoming entrepreneurs and starting their own businesses and a perceived lack of flexibility at major companies. The theory of the glass ceiling is that women reach a point in their careers and then are prevented from progressing further by an invisible barrier of discrimination. Other experts have advanced the theory that because admission to an M.B.A. program usually requires at least three to four years work experience, that the timing is problematic for working women who may already be dealing with the needs of a young family or thinking about starting a family. However, it was not theory that galvanized the women at the Simon School to act. Their catalyst was personal experience. (continued on next page)

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19

“There is no way to be

successful in business unless you can

motivate people

who work not

for you, but WITH you.”

COVER story

‘‘I Was Used to a 50-50 Ratio’’ Lisa Morris ’98 came to Simon two years ago from her home in Australia after spending six years working in a design and printing firm in her native country. She was taken aback, she says, because there were so many more men than women enrolled at the School. Her previous educational and job experiences had prepared her for something far different. As she puts it, “I was used to a 50-50 ratio.” She adds, “Ironically, at the time I had evaluated business schools, I was approached by an all-female M.B.A. school in the U.S. and I didn’t ever apply because I didn’t think it represented a realistic business situation. I think that’s another reason I was so shocked when I looked around the classroom on my first day of classes.” Morris, who recently joined the Maybelline Division of Cosmair, Inc. as a marketing assistant, “went to the Business Women’s Forum, (a Simon student-faculty-staff-alumni group) and started asking questions. We went around the room asking, ‘How did you find out about the M.B.A. or even just graduate study?’ Every single one of us in the room had a family member or close friend who had done graduate work. To me that meant if you don’t have an academic family and friends you might not find out about the benefits associated with going to business school.” That initial discussion, subsequent discussions with Simon admissions officials, and additional statistical research ultimately led forum members to formulate an action plan. Their strategy, directed by 1997-98 forum co-chairs Shannon Masten ’98 and Morris, brought the women of Simon together in a day-long retreat and led to a new Women of Simon marketing brochure. The plan also led to the School’s first undergraduate day to intro-

duce the concept of a career in business and future M.B.A. studies to female college students. One of the forum’s major goals is to stress the benefits of earning an M.B.A. degree from Simon, which is not only nationally ranked but also known for both the strength of its international student body and its emphasis on teamwork (see pages 21 and 22). What are those benefits? The answers vary dramatically and are as diverse as the people who come to the Simon School to earn the credential.

The Degree Is Very Flexible Patricia Matthews ’98 entered the Simon School after working for six years as an industrial engineer. “I was confident about my people management skills because of the positions I’ve held in the past but I wanted to broaden my skill set and become comfortable with all aspects of business. In particular, I found Simon changed the way I looked at problems. Before I didn’t see there were layers: strategy, the numbers and implementation. The School gave me the framework to analyze business problems and provide solutions that are consistent with a strategy, solidly based on the numbers and take into account the impact of implementation on a company.” This fall, Matthews begins a new job as a senior consultant for Deloitte & Touche Consulting Group in Parsippany, New Jersey. Kathleen Laurine, who will graduate in 1999, chose Simon because the School is one of the few business schools with a Health Care Management concentration. She sees Simon as the best way to combine her educational background in human services with her job experience in business so she is prepared to switch her career emphasis to health care. Laurine

explains, “My interest in health care was originally sparked by the serious illness of a family member. I want to make an impact, and make positive changes between health care providers and the persons receiving service.” Although she is only part way through her M.B.A. studies, Laurine is already employed in the health care field, working part-time at the Strong Center for Developmental Disabilities, a department of Children’s Hospital at Strong in Rochester, N.Y. Anne Hunt ’97 came to Simon because it offered her the opportunity to strengthen and round out the skills she’d developed after two years working in the banking industry in New York City and London. In business school, she says, “you are expected to think; to pull together all aspects of marketing, accounting, finance and other areas; present your points and get them across well.” These are skills she now uses everyday as an associate at Stern Stewart & Co., a leading financial consulting firm. Hunt says the value of an M.B.A. for a woman is simple to describe: “It makes you more valuable in the marketplace and shows you are dedicated.” Would she recommend the Simon School to other women? “In a minute. I do it all the time.” Finally, says Lisa Morris in summary, there is a paramount reason why a woman should consider getting an M.B.A. and supporting other women who have earned one. “Women have an amazing opportunity. It is this opportunity that we want to present to our female colleagues.” Editor’s Note: To learn more about the Business Women’s Forum and how you can participate, contact the organization via E-Mail at [email protected]. SB

First-Year Teams Are Key to the Simon Experience Team learning is a hallmark of the Simon M.B.A., more so than any other U.S. graduate business school. First-year teams work closely for an entire year and students quickly discover the team’s performance is critical to achieving success at Simon. Each team is extremely diverse, both in work experience and cultural background, since typically two of every five members come from outside the U.S. Graduates consistently report the team experience has great value. “There is no way to be successful in business unless you can motivate people who work not for you, but with you. And I believe that if you work successfully on a team at Simon that you can work with any team after that. In my first year, I was the only woman on my team. The other four members were from Japan, Brazil and the U.S. That’s not the usual business team. Because it is more challenging to work on a team at Simon than it is in the corporate world, it prepares you well. You learn how to work with people who are different from you.” Anita Pomerantz ’93 Manager of Product Planning Ziff-Davis Education

“I think I’m not alone in being the type of person who has a tendency to try to do everything oneself for fear of it not getting done, or not getting done right. Working on a (Simon) team helped me learn to manage that tendency. The team experience was particularly valuable in terms of allocating responsibilities. That helps tremendously on the job.” Dana Nadeau ’97 Manager, Planning & Analysis Babies R Us/Division of Toys R Us

“Simon School assigns you to a team for your first year and you have no choice but to make it work. That’s very real world.” Vicki Brown is a Rochester, N.Y., freelance writer specializing in business, education, medicine and the nonprofit sector.

Mary Kellmanson ’94 Group Manager, Marketing Development Wegman’s Food Markets

Today, Simon Is a Place Where Students Can Overcome Fears About “Quant” Skills In business school circles, Simon is often referred to as a “quantitative school,” notes Stacey R. Kole, assistant dean for academic affairs and assistant professor of economics and management. What many people do not realize, she says, is that the School invites M.B.A. candidates without analytical training in economics, accounting or related areas, and even individuals whose math skills haven’t been dusted off since high school. “The reason that’s occurred with more frequency is that we’ve accepted candidates with liberal arts backgrounds who have done a tremendous job,” says Kole. “Today Simon is a place where a person without ‘quant’ skills can come. We will convert you. We will show you how to use economics and analytical tools to meet managerial challenges. We have a number of alums and students who are testimony to that.” Mary Kellmanson ’94 is one of them. Having worked in communications for a U.S. senator on Capitol Hill, Kellmanson had already honed the “qualitative skills” she developed as a 1989 liberal arts graduate of Franklin and Marshall College. Pushed by her employer, the late Senator John Heinz, to consider pursuing an M.B.A., Kellmanson eventually opted to explore business programs rather than law school. “I ended up only applying to the Simon School. I wanted a quant school. I wanted to learn what I didn’t know, to gain skills I knew I didn’t have, because I wanted to go into business.” Kellmanson, who went on to graduate from Simon with honors, now manages corporate marketing development for the 56-store Wegman’s Food Markets, based in Rochester, N.Y. Laura Illig, who expects to earn her M.B.A. in 1999, was a political science undergraduate at Mount Holyoke, and she also chose Simon because of its reputation. “I wanted a quant school. I knew it would be tough, but I felt it was what I needed to round out my skill set. I also like the diversity of Simon, the (continued next page)

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Nearly half of M.B.A. candidates at Simon come from other countries — the highest percentage of COVER story

international students among any of America’s leading business schools.

“Quant” Skills

For Women Pursuing New Careers There’s Power in an M.B.A.

(continued from previous page)

teamwork aspect, and the fact that it is a small school.” Prior to starting her studies, Illig hired a tutor “to help me beef up my math skills since I hadn’t had any math since high school. We met every two weeks for six months and that got me back to thinking mathematically. I started Simon in September 1997 and it’s been a very challenging and positive experience.” Shannon Masten ’98, now an assistant brand manager at Unilever Home & Personal Care USA in Greenwich, Conn., readily admits that the biggest challenge for her at Simon was “reinvigorating and refreshing my analytical skills. I had excelled at mathematics in high school but had gone in a different direction as an undergraduate at the University of North Carolina at Chapel Hill and in order to keep those skills you have to practice them,” she says. “As a qualitative person, choosing Simon was the best

choice I could have made because the School challenged how I made decisions. My strengths are creativity, oral and written communication, and relationship building, but Simon grounded me in economic theory. From day one at Simon you begin using economic theory as a framework and quantitative tools to solve problems. My M.B.A. gave me the opportunity to learn the decision-making framework that will make me a stronger manager.” Adds Masten with enthusiasm, “Because of Simon I am a marketer who knows technology and can speak the language of finance, accounting and operations. The curriculum ensures you touch every facet of business. You leave Simon with a thorough business training experience and an unmatched set of decision-making tools. That’s something no other school could have given me.”

The International Student Experience Adds a Special Dimension to Simon Nearly half of M.B.A. candidates at Simon come from other countries—the highest percentage of international students among any of America’s leading business schools. Their varied experiences add a special dimension to Simon, notes Pamela A. Black-Colton ’88, assistant dean for M.B.A. admissions and administration. Black-Colton points to Mengdan Chu ’98 as an example of the diverse backgrounds international students bring to the School. Chu, 31, is now a senior financial analyst with Intel in Portland, Ore., but took time prior to her June graduation to talk about the unusual path she took to Simon. Chu is originally from Suzhou, a city in eastern China with a history dating back 2,500 years. “It is where scholars and artists come from….If you think of pavilions and gardens and the tradition of the Orient, that is where I was born. I went an hour away to college in Shanghai,” at a time when economic reforms were being debated in her country. “I wasn’t satisfied with campus debate. I really wanted to try entrepreneurship on my own. Arts and crafts were my interest. Suzhou has a great market but other shops were not offering a full array. I did a lot of research in Chinese ceramic and wood crafts, embroidery, traditional water and black ink painting, oil painting, watercolors and upper-end antiques.” At the age of 20, while still a college student, Chu opened a new shop with a partner, also in her twenties, and 10,000 Chinese yuan (then equivalent to about $2,000) borrowed from friends. “It was a great success and we expanded the shop,” but eventually the entrepreneur joined a four-star international

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hotel in her hometown in order to gain additional business experience, and sold her interest in the venture. “In China,” she explains, “the hospitality industry attracts some of the most brilliant, well-educated young people. They lack cultural experiences and with the hotel they gain skills working with expatriates from England, Singapore, Hong Kong.” By age 24, Chu became the executive manager. Some years later, Chu continues, she was eager “to learn true Western-style management” and to chart a course where she could learn more about finance and technology. She joined her husband, already a scientist at Yale University, and worked as a Sierra Club fundraiser in order to learn colloquial English and become well versed in American culture. She also took time out for the birth of her son, now nearly three, and spent time translating with some American professors a collection of Chinese contemporary poetry, which has since been published. When she applied to business school, she was immediately attracted to Simon. “It is in the top five in the nation in finance. I also like its holistic approach and the strong technology (computer) emphasis.” Its small size was another plus, she adds. “At Simon you have really good access to professors and you can interact with students.” Her long-term goal, after gaining experience in the U.S., “is to ultimately go back to Suzhou and Shanghai.” In the meantime, she continues to recommend Simon to others. “I have a friend coming from Singapore. I told her this is a very good place.”

Heidi Standhart ’96 and Dana Nadeau ’97 took different roads to the Simon School after graduating from college in 1985 and going to work, but both enrolled in graduate business school for one overriding reason. They were pursuing new career paths. “I wanted to be working in market research. To be in front of clients talking to them about their business and adding value by bringing insight to them from all the numbers,” says Standhart, who today does just that for Bristol-Myers Squibb Company’s Clairol division, where she is a product manager for Nice’n Easy hair color. Standhart had earned her undergraduate degree in general business, and saw the Simon School as the way “to really strengthen my toolbox,” she noted in a recent interview. Prior to enrolling at Simon she had worked for eight years for a syndicated research company, where she had successfully moved up in sales and client service. Still, she assessed her own skills as being “a little soft.” The research in which her firm engaged was not analytically driven, “and while we brought great insight to our clients and helped their salespeople, we didn’t bring great insight and thought to clients’ marketing departments,” Standhart says. Going to business school, she decided, was key to her future in the field she had targeted for herself. “Marketing people are the drivers. They are the decision makers. And I knew you needed to have an M.B.A. to get into marketing. As far as the education I received, I’m thrilled,” she adds. Nadeau, who earned her Simon degree a year after Standhart and even delivered a daughter, Sophie, two months before graduation, echoes many of Standhart’s sentiments about the power of an M.B.A. when you change careers. Today Nadeau is manager of planning and analysis for Babies R Us, a new 100-store division of Toys R Us. “There is no question that I wouldn’t be where I am if I hadn’t earned my M.B.A.,” she emphasizes. The Brown University graduate has an undergraduate degree in business and economics, “and had been out of college 10 years when I went to Simon. I had worked in sales and marketing for very small companies in the ski and outdoor sports industry. I wanted to switch functionally what I was doing. Although I loved the industry, I didn’t feel I was using certain skills in which I had strengths. I enjoy analytic and quantitative work, and I’m strong in those areas, but I wasn’t using those skills.” Her experiences at Simon, Nadeau says, “exceeded my expectations” on a number of levels. “I needed first to figure out how and where I could apply my analytic skills. I also needed to learn more about the state of corporate America and

more about current business practices. Those are pretty fundamental things but my opportunities to learn about them were limited prior to going into business school.” In addition, she says, “Simon helped foster my sense of confidence in myself and my abilities. That’s a very important thing in changing careers. In terms of the specific skills I learned—be it in finance or operations or marketing—there was a lot of value there and I’ve applied much of my education in my work today.” “Honestly,” she adds, “I did not expect to develop such great friendships through my experience at Simon. I was older than the ‘average’ student and had worked in such a niche industry that I had expected my interests to be quite different from other students. People do have these preconceptions about who is at business school, and what type of person they are. At the Simon School there is no mold. In my class there was a wonderful mix of people with such varied backgrounds and experiences. The international aspect was a major component that I didn’t think about going in. Coming out I realized that was a large part of my education.” At Simon, where usually approximately half of any class is composed of international students, Nadeau discovered “a wonderful diversity and a huge value in the interaction and communication.” Standhart underscores the same point. “One of the most valuable things was learning to work with cultural diversity. The first year you spend a tremendous amount of time with your teammates. One person had more difficulty with English than the other members, yet you had to have patience and work together to successfully achieve the tasks. My time at Simon eliminated previous stereotypes and fears about going abroad. Now I am looking forward to international assignments. Clairol values that and is willing to give me that opportunity when I have achieved my goals in U.S. marketing.” Another great thing about Simon, she notes, are the computer skills students develop. “In every class you have to present using the computer. The Simon School made me a PC whiz. My skills are among the top here at Clairol and that is a result of Simon, totally Simon.” Standhart adds, “Corporations are so lean these days. You are expected to jump in and go so quickly. To have to struggle with the software would have been an added nightmare. That was a hassle I didn’t have. It puts you out front quickly.” If you are thinking of changing careers, says Nadeau, “an M.B.A. can help get you in the door. It is something people respond to. I do think it is a qualification you can take anywhere.” SB


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98

we done.

FEATURE

The Simon School Class of 1998 graduated on Sunday, June 14, in Rochester, N.Y. University of Rochester President Thomas H. Jackson presided at the ceremonies. James S. Gleason ’68, chairman and president of Gleason Corporation, delivered the com-

Commencement ’98 Gleason Addresses Graduates Gleason, an alumnus of the first graduating class of the Simon School’s Executive Development Program (1968), spoke to the Class of 1998 about the changing environment of international business. “Many of the traditional boundaries between countries are coming down,” he told the graduates. “From now on, it will be more important for people who engage in business to think in global terms.” In this respect, Simon graduates have a definite advantage, Gleason added. “The Simon School’s large international student body and faculty, combined with the School’s emphasis on multicultural study teams, brings the global workplace to life for you. You leave here better prepared than other business students to manage global enterprises.”

Gleason Awarded Medal of Distinction

24

In his salutation to the Class of 1998, Dean Charles I. Plosser paid tribute to Gleason, Brands and France as having “demonstrated in tangible and significant ways those unique qualities and abilities that set Simon graduates apart from their peers.” “Each of them is a leader, and more importantly, the type of leader we can all strive to emulate,” he added. Plosser complimented the students on their “leadership, entrepreneurial initiative and ‘just plain hard work,’ ” and welcomed them to a “lifelong membership in the Simon community.”

Superior Teaching Awards Three Superior Teaching Awards for the 1997-1998

mencement address.

David T. Kearns Medal of Distinction

Dean’s Salutation

Gleason was honored by the School with the David T. Kearns Medal of Distinction, which recognizes “significant achievements in business, public service and education.” Gleason, who became CEO of Gleason Corp. in 1981, is widely credited with formulating a turnaround strategy for his company, a world leader in the development and


academic year were premanufacture of technologically advanced gear production machinery. His company ranked No. 41 on Fortune magazine’s 1997 list of the “100 Fastest Growing Companies in America.” Gleason, a member of the School’s Executive Advisory Committee and a University of Rochester Senior Trustee, is active in a number of business and civic organizations, and in many other worthwhile causes.

sented to Simon School faculty by students at this year’s commencement ceremonies. Clifford W. Smith Jr., Clarey Professor of Finance and Economics,

Other Honors and Awards

received the Superior

Philip T. Meyers Scholarship Award Highest record of academic achievement in the Full-Time M.B.A. Program Rajinder Singh

Teaching Award from the

Distinguished Alumnus Award

graduating class in the

The Distinguished Alumnus Award was presented to Paul A. Brands ’66, chairman and CEO of American Management Systems, Inc. Brands is part of the team that directs an $800 million company that has grown 20 percent per year for the last decade. In addition to his management responsibilities, Brands serves education as a member of the Simon School’s Executive Advisory Committee. He has been generous with his time and resources and has been a key factor in making his firm a major recruiter of Simon graduates.

Full-Time M.B.A. Program; Shailendra Pratap Jain, assistant professor of marketing, from the first-year M.B.A. class; and Michael J. Barclay, professor of finance and finance area coordinator, from the graduating class of the Executive Development Program.

Richard L. Rosenthal Award The Richard L. Rosenthal Award of $7,500 was awarded to Wayne D. France III ’94. The award, which recognizes innovation in the fields of investment management and corporate finance, was established through the generous support of The Richard and Hinda Rosenthal Foundation.

John M. Brophy Award Highest record of academic achievement in the Part-Time M.B.A. Program Jeffrey D. Witkop Hugh H. Whitney Award Highest record of academic achievement in the Executive Development Program Madhav Mehra Karl Brunner Award Highest record of academic achievement by a non-U.S. student in the M.B.A. Program Rajinder Singh

profile CLASS OF 1998 The Simon School Class of 1998 includes 296 graduates of the Full-Time and PartTime M.B.A. programs, 63 graduates of the Executive Development Program, nine graduates who received the M.S. degree and seven graduates who were awarded the Ph.D. in business administration. The leading areas of concentration of this year’s full-time class are: Finance, 74 percent; Corporate Accounting, 25 percent; Marketing, 19 percent; Competitive and Organizational Strategy, 11 percent, and Entreprenuership, nine percent. (Graduates may have concentrations in as many as three disciplines, so the total of the foregoing numbers exceeds 100 percent.) Other concentrations include Business Environment and Public Policy, Computers and Information Systems, Health Care Management, International Management, Operations Management, Public Accounting, and Accounting and Information Systems. As of June 1, the number of job offers to Simon Class of 1998 full-time M.B.A. graduates increased by an impressive 29 percent over offers made (by the same date last year) to 1997 graduates. Total compensation including bonuses has increased over 23 percent to $94,523. Offers by functional area in 1998 are: consulting, 32 percent; finance, 23 percent; investment banking, 23 percent; marketing, 13 percent, and general management/operations, nine percent. Firms that have hired three or more Simon graduates this year include: • American Management Systems, Inc. • Arthur Andersen & Co., LLP • Cigna Health Care • Citicorp/Citibank • Ernst & Young LLP • G.E. Capital Corporation • M&T Bank Corporation • PricewaterhouseCoopers LLP • Procter & Gamble Company • Putnam Hayes & Bartlett • State Street Bank & Trust Co. • Stern Stewart & Co. • U.S. Bancorp.


25

FEATURE

Will Japan Reform?

1963, when David T. Kearns (who succeeded Peter McColough as CEO of Xerox in the late 70’s) pushed his ailing company to adopt Japanese quality and customer-focused practices, Kobayashi says. However, Xerox then married those innovations to process re-engineering and organizational restructuring.

The

ing in existing ones. Thus, Kobayashi says, even fundamentally sound small businesses are going under. Eventually, he sees Japan developing a more flexible workforce. Two-income families will become increasingly popular, Kobayashi predicts, but adds that such changes cannot be rushed. Part of what has to happen, he says,

to roughly a dozen to usher in fundamental reforms. But the most important reforms, he says, will not come in government offices or in boardrooms, but in classrooms. “Educational reform is most important in the long term.” After World War II, Kobayashi says, Japan adopted a U.S. style-grade sys-

winds of change are already stirring, says Fuji Xerox Co., Ltd. CEO

Under pressure from its recessionary slump and Asian fiscal turmoil, corporate governance in Japan is changing. So says Yotaro Kobayashi, chairman and CEO of Fuji Xerox Co., Ltd. Kobayashi sees opposing forces at work in Japan. Its own citizens— guilty of fostering complacency—wonder whether the country will sink or swim, he says. Still, Kobayashi believes that sure and steady change is coming to his homeland, but predicts it will arrive slowly. Trends Kobayashi sees already beginning to develop are the shrinking of corporate boards and the flattening of Japan’s traditionally hierarchical organization. At the same time, Japanese firms remain insular. Traditionally, Kobayashi says, Japanese corporate boards are manned by only inside directors. Firms do not see such boards as inbred, he says. Instead they ask: “What does an outsider know about our business?” Kobayashi feels such views are “ironic.” He believes that more outside perspective is exactly what corporate Japan needs. As CEO of Fuji Xerox and as a longtime board member of Xerox Corp., Kobayashi has an 26


insider’s view of Japan, as well as insight into how U.S. and European interests see his country. A fundamental problem Kobayashi sees in Japan’s economic woes is the thrifty habits of a middle class too comfortably padded with savings to put any real pressure on government officials and corporate managers. Despite some concern over this lack of public pressure, Kobayashi’s take—at least for the short-term—is more optimistic than gloomy. He sees Japan recovering much of its vigor by the year 2000. At the same time, he says, “the medium- to long-term is a concern. Reforms are needed.” American critics have looked askance at Japan, saying its response to recession and fiscal crisis has been entirely too anemic. Japan, they say, is the first domino after which stand the even shakier economies of Southeast Asia, Malaysia and Korea. To the critical American eye, much about Japan is ready for change. Its boardrooms and government offices are clubby, secretive and inefficient, complain Western critics. Many see the cradle-to-grave sinecures—traditionally granted to salarymen in major firms such as Sony Corp.—as a deterrent to

productivity. Kobayashi says that at least some of the West’s criticism is justified. The Western view of guaranteed lifetime employment in Japan is not entirely accurate, he says. Job security for those who work for small businesses has always been “shaky.” But corporate Japan has always been more concerned with the welfare of its workforce than with returns to shareholders. Thus, employees of big firms such as Sony Corp. are guaranteed positions until the age of 60. As a result, Kobayashi says, Japanese productivity has never paralleled its U.S. counterpart. While Japan excelled in quality and was able to teach U.S. firms—such as Xerox— important lessons about quality and customer focus, it was not enough. The system worked fine as long as Japan’s economy continued to grow, Kobayashi says. But with economic growth stagnant through much of the 1990’s and the country’s slide into recession last year, corporate Japan can no longer afford to continue on the same path. Corporations are slowly responding to the concept that they must rebuild and in doing so, use a more “Anglo-American” blueprint. Xerox first partnered with Fuji in

Now, Kobayashi says, Japan needs to look to the West to learn how to boost its own productivity, adding, “Japanese companies will need to reduce their manpower and physical facilities.” Japan will not be able to totally emulate the West, Kobayashi says. It will have to strive for a “happy medium” between its traditional, “humane” employment practices and Western-style restructuring. Japan, for one thing, cannot yet create enough jobs to accommodate those workers to be trimmed in massive layoffs. To the Japanese, widespread unemployment would be unthinkable, Kobayashi says. Gripped by its worst recession since the end of World War II, the country’s 3.9-percent unemployment rate would still be the envy of many in the West. Yet, says Kobayashi, the rate is the highest Japan has seen in half-a-century, and is highly worrisome to the Japanese. In Japan, small businesses—the catalysts for most jobs in the U.S.—are hobbled by the banking crisis. Japanese banks are presently constrained to loan no more than four percent of assets. Many are not only refusing loans to small firms, but call-

is a change in Japan’s corporate psychology. “We have to learn to be different.” The Japanese are not as comfortable as Americans with innovation, he says. They prefer to mimic and improve what has already proven to be successful. In business, this practice has led to diminishing returns. When an innovator does come along, everyone jumps on the bandwagon, Kobayashi says, so the desired outcome is diluted. Everyone’s profits suffer. To create new opportunities, Japanese business has to learn to change its game plan—to borrow less and create more. Likewise, corporations must learn to tolerate dissent. Those boards that replicate existing management structures must shrink and accept outsiders who might bring a fresh perspective. To some extent, Kobayashi sees external forces as driving some immediate change in Japan. With Japanese financial institutions in crisis, for example, Japanese investors are turning more to foreign-based institutions such as Citicorp and Merrill Lynch & Company. This, in turn, will speed up Japanese markets, he believes. Government reform will have its effects as well. Kobayashi sees a plan to trim the number of ministries from 20

tem, and in the process dropped an extra year of high school. The high school period, he says, used to be an important time for students “to have heart-to-heart talks with teachers or fellow students” before beginning a more specialized college career. “Now, this has been forgotten.” he adds. Japanese college students spend their first two years studying basic humanities before choosing an area of concentration in their third year. And, according to Kobayashi, students often rush through the basics, taking the easiest courses they can find. Educational reforms presently underway in Japan, he believes, will allot time for the contemplation and exploration students lost in the postwar restructuring of Japan’s educational system. In turn a more rounded generation will complete Japan’s reform process. “Cynics doubt that major reform will happen,” Kobayashi says. “But I think the government’s mission is clear.” SB

Yotaro Kobayashi was a Frederick Kalmbach Executive Seminar Series speaker at the Simon School on May 24, 1998.


27

after his father died. At the time, business at the exchange was still conducted much as it had been when Phelan toiled as a teenager. Indeed, says Phelan, equity trading had seen virtually no change since 1919. Transactions were recorded and filed on paper. The stock ticker and the telephone were the most modern conveniences used. Tired of working until midnight to process orders on days when trading was heavy, Phelan claims to have been the first on Wall Street to computerize his back office. He did so by trucking his orders to a data processor, who did the chore for three cents a page.

FEATURE

Phelan sees his former opponents as a generation

ation of the Social Security system in the 1930’s. The 1940’s brought World War II. In 1949 pension funds were ushered in. The 1950’s saw the post-war building boom, the G.I. Bill and the baby boom. In 1961, equity mutual funds began to appear. Meanwhile, the U.S. economy, riding a wave of post-war, pent-up consumer demand, was hot. Phelan says they called it the “go-go” economy. Then, in 1965, President Lyndon Johnson introduced the Great Society and simultaneously accelerated the war in Vietnam. During the “go-go” era, Phelan says, equities were as hot as London’s Carnaby Street. Manufacturers’ stocks traded for 50 times earnings and more. “Later, after Johnson’s ‘guns-andbutter’ doctrine began to strain the nation’s resources, the same stocks fell to five-times-earnings. After peaking in 1968, it took the market 14 years to reach the same level again,” he adds. Still, double-digit inflation in the 70’s sent savers scurrying to move their five-percent-interest savings accounts from banks into money market mutual funds which changed the whole

struggling against a new order Reflections on the Big Board Former New York Stock Exchange CEO John Phelan recalls his years on Wall Street When he was 16, after having spent the summer working at his father’s dealer firm at the New York Stock Exchange, John Phelan vowed never to work there again. In 1991, after forty years as a dealer, board member, vice chairman and president, Phelan retired from the New York Stock Exchange after seven years as its CEO. So much for youthful resolve. The exchange struck the 16-year-old Phelan as crowded, noisy and paper strewn. Worst of all, his father paid him only enough to cover lunches and carfare from their Long Island,

28


N.Y., home. So, summer’s end found him as broke as he was when he started. Though his financial gain was nil, Phelan says, “the experience taught me my first great lesson in business: Never say never.” Forty years in the financial markets, he adds, taught him another: To quote Machiavelli, “There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success than to take the lead in the introduction of a new order of things.” Phelan speaks from experience. He took over the family business in the early 1960’s

Later, in the 1970’s as an exchange vice chairman, Phelan was among the first to champion computerization of many exchange functions. The idea did not win rave reviews. Phelan recalls scheduling sessions to promote the idea with groups of Big Board members. Those meetings typically turned into intense conversations with virtually everyone present vehemently denouncing the innovations Phelan proposed. To today’s broker-dealers, the old guard’s resistance might be hard to fathom. Used to a system in which trades are electronically executed, markets themselves are electronically linked and quotes are available with a keystroke, traders of the 1990’s have difficulty understanding why the old-timers objected to changes that would have simplified their lives. Phelan sees his former opponents as a generation struggling against a new order whose triumph should have been seen as inevitable. Through the 1950’s and 1960’s, he says, the exchange leadership stayed stuck in a “jazz-age mentality,” because it was from the 1920’s. World War II had put an entire generation in the foxholes of European and Pacific theaters instead of on Wall Street. By the 1960’s, however, times were changing. Trade volumes in equities were climbing, and throughout the next few decades would grow to dwarf even the highs of the 60’s. Had the exchange not computerized its operations, it is hard to imagine how financial markets would have coped. Even by the 70’s, Phelan says, some $100 million of member firms funds— whose sources could not be traced—went to Uncle Sam as unclaimed money because volume had overwhelmed the back offices of the industry. Among the reasons Phelan sees for the market’s staggering growth are social and political changes, beginning with the cre-

whose triumph should have been seen as inevitable. financial system and also poured money into equity markets. And at every juncture, Phelan notes, prognosticators read the signs wrong. For example, just before the market revived in 1982, a well known business weekly declared equities dead. Another time, the magazine trumpeted the death of American manufacturing, failing to anticipate the rise in corporate earnings fueling the current bull market. Phelan himself declines to predict the future. The present ‘up’ market will continue as long as corporate earnings remain high, or at least higher than expected, he says. Beyond that prognostication, however, Phelan will not venture. He says one of the few accurate predictions of the market’s direction came from financier J. P. Morgan, who when asked what the market would do, paused and replied: “It will fluctuate.” To those seeking systems or patterns that will reveal the secrets behind these fluctuations, Phelan offers only this advice: “Roll with change.” At the same time, he cautions, change is a two-edged sword. It is like an opiate, Phelan says, and like a drug, “it can bring relief or disaster.” And, says Phelan, “Change is unending. If you don’t like change, it has the same effect as disliking Monday. Whether you like it or not, it will come.” SB John Phelan was a Frederick Kalmbach Executive Seminar Series speaker at the Simon School on April 15, 1998.


29

Ball Honored (continued from page 6)

incoming AAA president. General criteria for selection of lecturers are the professional qualifications of the nominees, including teaching and research, as well as the ability to speak knowledgeably about the accounting profession and accounting education. In August 1986, Ball’s paper, “An Empirical Evaluation of Accounting Income Numbers” (written in 1968 with Philip Brown), won the AAA’s Inaugural Award for Seminal Contributions to the Accounting Literature, the highest award ever given to an accounting researcher. The work is responsible for opening more research avenues for hundreds of doctoral students and faculty over the past 26 years than any other piece of accounting research, and for significantly influencing both regulators’ and practitioners’ views on the role of corporate disclosure.

Ball’s research demonstrated that earnings and stock prices are related, but that most stock price movement occurs before the release of year-end earnings figures, primarily because of alternative, more timely sources of information. This conclusion was a surprise to accountants and financial analysts in both academe and practice, changing the way in which they thought about the use of accounting information in financial markets. Although written for a high-level academic audience, the Ball and Brown findings appear in introductory financial accounting courses. Their theory that financial markets are sophisticated in their use of accounting information now permeates debates at the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) in the U.S., as well as similar public bodies that set

accounting reporting standards in other countries. Ball, a Fulbright Scholar and Ford Foundation Fellow, earned a bachelor of commerce degree with first-class honors from the University of New South Wales, and M.B.A. and Ph.D. degrees from the University of Chicago. He has received honorary degrees from the Helsinki School of Economics and Business Administration and the Katholieke Universiteit Leuven. He is a fellow and C.P.A. of the Australia Society of Accountants; a member of the Securities Institute of Australia, the Australian professional association of security analysts; and has been appointed an honorary professor in the European Institute for Advanced Studies in Management (Brussels) and a Distinguished Fellow of the Center for Independent Studies (Sydney). SB

The Asian

Crisis

collapse of the ruble Decisions based on real-time information Can anyone mix business & pleasure The

anymore?

Mais oui...

if you're a Simon graduate!

Professors Win Award (continued from page 6)

words, they developed an integrated approach that brings together technology with the understanding of operations and organizational architecture. Their work has tremendous economic value for banks, hospitals and government agencies that deal with complex business processes, showing them how to effectively reduce the number of documents processed without sacrificing quality. The novel mathematical model the researchers developed shows how to redesign tasks within a process to make them more efficient, and thus more productive and successful. Their results ultimately lead to better designs with fewer handoffs and duplications. This is the second time that Dewan and Seidmann’s joint research in this area has been internationally recognized. In December 1995, their paper (with Shankar Sundaresan), “Strategic Choices in IS Infrastructure: Corporate Standards Versus ‘Best of Breed’ Systems,” won the Best Conference Research Theme Paper Award at the 16th International Conference on

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Announcing the first Simon School European Alumni Reunion...in Paris at Le Meridien Montparnasse Choose one or both options :

European M.B.A. Update Courses presented by Simon School faculty—March 22-25, 1999 Reunion - Seminars and Social Events—March 25-28, 1999 All Europe-based alumni of the University of Rochester and the Simon School will receive brochures and invitations; interested alumni from other continents are encouraged to attend and will be sent invitations on request. Special events and tours will be arranged for families of alumni. Abraham Seidmann

Information Systems in Amsterdam. Dewan’s work has appeared in the Journal of Computing, Decision Support Systems, IEEE Transactions on

Computers and other journals, and Seidmann has published extensively in many leading scientific journals. SB

For invitations and information on reservations and prices, please contact Jane Tibbitts, events coordinator, in the Office of Alumni Relations and Development at 716-275-9176, or via E-Mail: [email protected]

MISSION Statement

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E . S I M O N G R A D UAT E S C H B U S I N E S S A D M I N I S T R AT I O N

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PHILOSOPHY The mission of the William E. Simon Graduate School of Business Administration is to be a recognized leader in the creation and dissemination of an integrated body of knowledge that has significant impact on managerial education and practice. The School’s educational programs focus on graduating outstanding individuals who are prepared to excel in a dynamic and internationally competitive marketplace.

The hallmark of a Simon School M.B.A. education is its proven analytical framework for solving problems. With economics as a discipline for integrating knowledge across functions and for understanding human behavior, Simon students learn a coherent, scientific way to analyze management problems. This powerful perspective enables students to break away from narrow functional views of their jobs and organizations. In today’s flatter organizations and more entrepreneurial enterprises, Simon students excel because they understand the interplay of individuals, organizations and markets and how to exploit that understanding to enhance firm performance in today’s global environment. Complementing the analytical skills, the School promotes leadership, communication and teamwork through a combination of classroom activities and structured experiences. This integrated approach to management is made possible by the School’s small size and a collegial faculty that is not bound by departmental or functional constraints in their teaching or research.

GOALS In order to fulfill the mission, the School has identified a set of specific goals: ■ The Simon School aggressively seeks to further its recognition and reputation among business leaders, the corporate community and academia. This will result in improved student recruitment, provide additional research opportunities for faculty and enhance placement opportunities for all our students. ■ The Simon School seeks continual improvement in the quality of its programs and teaching— graduating exemplary individuals who excel in managerial or educational positions worldwide. ■ The Simon School must attract, maintain and nurture an outstanding faculty. Since the faculty is critical to achieving the mission of the School, they must be encouraged and provided resources to develop important and relevant scientific research that advances both the understanding and the practice of management. To accomplish this, the School must foster and reward creative risk taking by the faculty in their research and their development of educational initiatives, and encourage efforts to communicate their research beyond the academic community. ■ The faculty and the student body must remain of a size that maintains and promotes the collegial and integrated approach to management education and research. ■ Given the globalization of business and business education, the Simon School must attract an internationally diverse student body of the highest quality in both its M.B.A. and Ph.D. programs. Students are expected to excel academically as well as in terms of the management experience they bring to the School and their prospects for success in their chosen endeavors. ■ The Simon School seeks to provide an environment that promotes the professional development of students, faculty and staff. ■ The School actively involves its interested communities (i.e., students, alumni, friends, etc.) in its efforts to improve the quality and the recognition of its programs.

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