“A felony is forever. That’s not a legacy to leave to anybody.”

Harvin C. Moore III (right) gave a speech on ethics Nov. 4 to Urton Anderson and Janet Dukerich’s undergraduate studies class, Organizational Corruption and Organizational Control.

At first glance, Moore looks like the picture of success. He earned a law degree from UT Austin and went to work for a law firm in Houston, where he had a “Midas touch” for putting together lucrative business deals. His real estate developments were valued at $250 million and he co-owned a savings and loan business with more than $400 million in assets.

It wasn’t until Moore took off his jacket and put on the prison badge he wore during his 2-year sentence in federal prison that students realized that this wasn’t going to be like any ethics speech they had heard before.

Moore was in business during the collapse of both the oil and gas industry and the real estate market in the four oil and gas states - Texas, Colorado, Oklahoma and Louisiana. That collapse caused all of his personal business to fail and left him with only the savings and loan institution, which he believed to be in excellent health.

However, the savings and loan institution was hit by defaults on the loans it had made to people in Houston and under the rules the partners could not declare a dividend for themselves under those circumstances. That meant that they could not pay back their debts and lenders were threatening to foreclose on their stock in the institution, thereby forcing both parties into bankruptcy.

It was the pressure and fear of being without a job that caused Moore to make three loans to his friends. Those friends would then use part of the money they were lent to “buy” miscellaneous assets from Moore’s personal holdings so that he could use the money to pay his debts.

Moore said he knew that this type of lending was illegal but that he rationalized his actions by convincing himself that he needed to do it to survive. He also told himself that he and his partner were the only ones at risk since they had made the original loan and would be the only ones hurt if the borrower defaulted. He tied it all up by reminding himself that “everybody’s doing it,” and that they were doing far worse things than what he had done.

Things continued to get worse at the institution, however, and by the end of 1988 the company had been taken over by the Resolution Trust Corps (RTC), which mean that Moore lost ownership of the company to the government and had to file for bankruptcy anyway. It was then that his 27-year marriage ended in divorce.

During the investigation of his bankruptcy filings the RTC found those illegal loans and filed a criminal suit against Moore. While he was planning how to defend himself, he suddenly realized that he had no defense.

“It didn’t matter that the institution was solvent when I made that loan,” said Moore. “Did I get the money out correctly? The answer is no. That is a federal crime, and I realized I could not go into a courtroom and plead not-guilty.”

As a result of his conviction, Moore spent 601 days in federal prison and three years on parole in Houston. He was forced to pay $500,000 in restitution and he lost his licenses to practice law and to issue property, casualty and life insurance. He also lost the right to vote or to own or possess a gun.

He said that the toughest thing was getting a job after his release. He went through five jobs in five years before he found one that gave him a platform from which to rebuild his life and his career.

Moore ended his talk by reinforcing the consequences of one bad decision.

“When you make the right choice, most of the time there is a short-term cost associated with it,” said Moore. “But the potential of taking the other side is a long-term liability.

“A felony is forever,” he continued. ”That’s not a legacy to leave to anybody.”

Ben Bentzin, marketing lecturer at McCombs and a former Dell executive, spoke with McCombs Communications Director David Wenger about changes in marketing approaches, Dell’s new focus on innovation to draw in customers and why he thinks you shouldn’t outsource your social media efforts.

David posted the full interview, along with audio clips, on his ID University blog. Check out a few highlights from Bentzin’s answers below:

On frequent reinvention of your marketing strategy:
A strategy is something a company can do better than their competitors sustainably over a long period of time. And so if the strategy changes every 6 months, it isn’t really a strategy it’s a tactic. And in some businesses these tactics are a process of exploration, finding out what works and what doesn’t work, which can be a very effective way of strategy development. To a certain extent the best market research you could possibly do is to put an offer in front of consumers and identify what consumers respond to. Once you’ve defined your strategy, if it’s a successful strategy, it will carry you for a very long period of time.

On how Dell has responded to changing market conditions:
Dell, with the Latitude Z and with other products, is starting that process of exploration, to identify how to compete in the world where competition is defined less on the basis of configurability and supply chain, and more on the basis of integrated whole products delivered with relatively little configuration. Dell’s development model historically had been the very fast follower, not necessarily innovating in all the new product categories, but being the first to market to deliver the new technology in the configuration that consumers found attractive.

Now we’re finding that Dell is exploring this possibility of more native product innovation, competing directly on the basis of product innovation as opposed to following the trends of where consumers were headed.

On having an authentic social media voice:
I find that social media and that kind of communication is very difficult for to sound authentic coming from a contractor or somebody who’s outside of the company. Sitting outside the company and trying to be the personality of the brand is very, very difficult. It’s typically going to be most successful from someone who is in the heat of the battle in direct contact with the information flow of what consumers are saying, and what is the product offering, and the company’s strategy in terms of the product they’re offering. That will ring true as authentic because it is authentic.

Tito’s [Vodka] has a very strong brand profile, and all of Tito’s social media comes from one brand of manager who’s been with the company for a very long period of time and feels passionately about the product, feels passionately about Tito’s, and does an outstanding job of representing the brand because she really represents the personification of the brand.

Supervisors in the McCombs School of Business have notified 16 people that their positions have been eliminated as a result of the current budgetary crisis, with a final employment date of Jan. 31 for the affected positions. Staff reductions at the school were announced Sept. 15 and finalized on Monday, Nov. 2.

The school’s human resources director, Del Watson, in coordination with the university’s Human Resource Services department, will provide assistance to affected staff members with career services programs. Counseling will be available through the Employee Assistance Program. Affected employees will be given “special consideration” status in the hiring process for future positions at the university.

“Our priority is to ensure that individuals are treated with dignity, respected for what they have contributed to the school and assisted in their job search,” McCombs School Dean Tom Gilligan said.

Unit heads within the school held group meetings with those not affected by the staff reduction to answer questions about the impact of the reductions upon work load and staff morale.

“While we are especially concerned for those directly impacted,” Gilligan said, “we also recognize that everyone feels the effects of the reduction in some way or the other. This is a time for us to listen to concerns, be supportive and help teams readjust.”

Gilligan said the staff reductions are expected to make up about 20 percent of the overall cost-saving measures the school will implement to ensure the continued success of the McCombs School during difficult economic times.

“Two priorities remain paramount to our mission even as we struggle with the budgetary challenges,” Gilligan said. “First, the McCombs School is populated by a tremendously productive and committed community of professionals, and we must reallocate the resources necessary to reward and retain our very best faculty and staff.  Second, new faculty are central to the prominence of our school and the new initiatives we are undertaking in our strategic plan. This means we must continue to proactively hire the very best scholars available.”

Gilligan said that with prudent planning the McCombs School can emerge in a stronger position to meet its goal of becoming one of the most prominent business schools in the world, while educating the next generation of leaders.

Some of the best business students from around the world convened in Austin October 27-31 for the 16th McCombs International Business Competition (MIBC), one of the top annual undergraduate business competitions in the world. In total, 20 schools from North America, Asia and Europe competed in this year’s MIBC, which was sponsored by Motorola, the Undergraduate Business Council and the Office of Student Life.

Motorola put together an open-ended case that challenged the four-member teams to present an innovative global business strategy for the company. The winner was the University of Hong Kong, which became the MIBC’s first repeat winner.

“It was a fantastic event,” said Gautam Shah, MIBC chair. “We had a great, involved company with Motorola. The University of Hong Kong team presented a thorough solution that impressed all of the Motorola judges. It was airtight.”

McCombs’ John Doggett, one of the competition’s faculty advisors, said that what makes the MIBC special is that it uses only real cases.

“We give them a three-page ‘engagement letter’ from senior management and ask them to spend two days researching the challenges mentioned in the letter,” Doggett said. “And they have the opportunity to engage with the senior executives during a Q&A session a day before they make their recommendations.”

As for the winning team, Doggett said that Hong Kong was “simply amazing.” He said, “In 48 hours they produced a new product development and launch strategy for two new mobile devices for the China market that was so detailed that they even had chipset specifications for the two new phones. What those ‘undergraduates’ did during the finals was truly something to behold.”

Doggett continued, “ Motorola sent four executives to be judges, and their former acting CFO and current board member, Tom Meredith, sat in on the presentations. It says volumes about what Motorola thought about the value of this competition that they would send so many senior managers to see what undergraduates from 20 universities from 9 countries had to say.”

“The students were outstanding,” said Elizabeth Altman, vice president of business development in Motorola’s Mobile Devices business. “They showed great skill and professionalism in both their analyses and presentations, and a few of the groups developed creative ideas that we will explore further. Additionally, the team of undergraduates that organized the competition was equally impressive. We thoroughly enjoyed our involvement and commend the organizers and competitors for an exceptional event.”

In addition to the University of Hong Kong, the other three finalists were FGV from Sao Paulo, Brazil, the University of Washington and Georgetown University.

Join us on Nov. 9 as we present Evan Smith and Fred Zipp in conversation on the new age of journalism. They will be exploring trends among traditional and digital media.

Evan Smith is CEO and Editor in Chief of the Texas Tribune, a new non-partisan public media organization. Smith was until recently the President and Editor in Chief of Texas Monthly.

Fred Zipp has spent 25 years in daily newspaper journalism, the last 11 with the Austin American-Statesman. He currently serves as the Editor. He began his career in Beaumont and has also worked in West Palm Beach.

Seth Lewis, former journalist and doctoral student in journalism at The University of Texas, will moderate the discussion.

A reception will follow the panel discussion. Please RSVP if you plan to attend. Non-members will be charged a $10 guest fee at the door.

In response to families across the country searching for ways to reduce expenses, ABC News provides “10 Ways to Go Away Without Going Broke.” One of these ways highlights a venture by McCombs Enterprises, Smarty Pig.

Be Social: Want to make it easy for Grandma and Uncle John to contribute to your vacation fund? Consider opening an account at SmartyPig, an online piggy bank where you can set a savings goal and target date. While you save, your money earns interest in a FDIC-insured financial institution to the tune of 3.25 percent APR, one of the most competitive rates in the country. And if you decide to make your goal public — you can even post a widget to your Facebook or MySpace page — your friends and family can also make donations.

Almost one in five SmartyPig customers are saving for a travel goal, according to Mike Ferrari, the company’s co-founder and COO. “In fact,” says Ferrari, “I have two kids, and my wife and I are saving on SmartyPig for two trips right now.”

For the full article, please visit ABC News.

It’s no exaggeration when I say that nine out of ten people are nostalgic about the time they spent in school and/or college. They tend to call them “the best days of their lives.” That’s not to say that their current situation is bad; it only goes to prove that those days when you had no real responsibilities other than to make good grades and stay out of trouble are evergreen in your mind because you were young, carefree and ready to embrace life with a passion. We gain so much more than just an education from our school and college, so it is imperative that we try to give as much back. The term alma mater is reason enough, but if you need further motivation to give back to your school or college, read on:

• Alumni play a large role in determining the future and continued development of an institution.
• Your donations go a long way to support scholarships for deserving students who are short of funds.
• You are giving back to more than just your alma mater in this case; you are also helping someone gain a valuable asset, a quality education.
• Your regular contributions make a big difference to the operating budget of your alma mater and this helps sustain regular programs and initiatives.
• Your money could also be used to fund and sustain innovative programs that help improve the quality of the education offered at your alma mater.
• If you are short of money, volunteering your time also benefits your college and school.
• When your alma mater continues to remain a popular and prestigious institution, the value of your degree increases as well.
• When alumni contribute openly to their alma mater, it is easier to procure funds from outsiders and other organizations and philanthropists as well.
• You can give back to your alma mater much more than money – one alumnus helped build a nature trail on the 8 acre spread of his former institution so that nature lovers could enjoy the serenity and beauty of the campus.
• Contributing to your alma mater in a significant manner gives you and your business good publicity, and publicity never hurt anyone even if it’s not your original aim.

So if you’ve been neglecting your alma mater, rectify the situation and start giving back in any way you can, today.

It’s been eight years since Enron collapsed into bankruptcy, but memories linger in corporate boardrooms, where directors are charged with preventing a reprise of the self-dealing and accounting scandals that sunk the energy company. It’s a set of responsibilities William Powers understands well: before becoming president of the University of Texas in 2006, Powers—a lawyer and professor—was tapped by Enron’s board to lead a special investigation to determine what went wrong and why. In the latest of his series of interviews as part of Newsweek’s partnership with the Kaplan University M.B.A. program, Newsweek chairman Richard M. Smith spoke with Powers about Enron’s impact.

Read excerpts from the interview or watch the full video interview.

Assistant IROM Professor Rafael Mendoza-Arriaga received the 2009 Nemhauser Doctoral Dissertation Prize for his paper “Unified Credit-Equity Modeling.” The award is given to the best doctoral dissertation in Industrial Engineering and Management Sciences (IEMS) at Northwestern University.

“Being recognized with an award named after Professor Nemhauser is a great honor that carries with it the great responsibility to produce excellent research during the academic career that I have just started at McCombs,” says Mendoza-Arriaga, who joined the McCombs faculty this fall. ”I hope to contribute much more to the quantitative finance group in the near future.

“I feel very grateful for the support received from everyone in the IEMS program: faculty, staff and classmates. In particular, I feel very in debt to my advisor Vadim Linetsky, from whom I learnt so much about quantitative finance.”

His thesis proposes a modeling framework that allows to consistently price and hedge the entire book of credit as well as equity derivatives, in addition to the ability to incorporate a rich assortment of empirically relevant features of these markets.

The Wall Street Journal, October 20, 2009

A recent column in the Wall Street Journal, headlined “When Bad Luck is a Crime,” uses research coauthored by Andrew Henderson (right), associate professor of management.

Excerpt: When it comes to cheering CEOs, booing them or throwing them in jail, a consideration that ought to be nagging is whether we’re reacting to luck or design. Ken Lay, to cite a notorious example, was prosecuted not for the sins that brought down Enron, but for failing to tell investors the company was predestined to fail even as he tried to save it….

How much more fun, when dealing with circumstances like these, to play the after-the-fact-know-it-all, naming heroes and villains with the confidence afforded by the rear-view mirror. Bad enough is when journalists give unreflective vent to this urge, but unhealthy for society is when prosecutors do it.

For a bracing dose of perspective, consider the flip side question. An eye-opening new paper asks: With so many public companies to choose from, how do we know the good firms from the merely lucky ones? The question is a much harder call than you might think.

The authors—Andrew D. Henderson of the University of Texas at Austin, and Deloitte Consulting’s Mumtaz Ahmed and Michael E. Raynor—begin with a caveat no less applicable to the joyous media blame-laying after the subprime debacle: “If you have a large number of players in a game in which luck plays a major role, then some players will assemble seemingly impressive winning records by chance alone.”

“Luck,” they add, “can mislead us . . . because humans tend to mistakenly perceive patterns in random data.”

By way of analogy, imagine a classroom of 70 students, each of whom is asked to flip a coin and sit down if tails comes up. According to the law of probabilities, after seven flips a single student should be standing—the one who flipped heads seven times in a row. If the student were a company, the authors say, he’d quickly become a case study of “excellence” in coin flipping.

Messrs. Henderson, Ahmed and Raynor, who presented their work at the Academy of Management’s annual meeting in Chicago in August, weren’t just indulging an urge to philosophize. Their goal was to design criteria for identifying excellent firms while cutting the rate of “false positives” to approximately one in 10.

It turns out the criteria are exceedingly stringent. Over a period of 10 years, a firm must score among the top 10% of performers at least nine times. Only 150 firms in a database of more than 21,000 make the grade—including Microsoft, Tambrands and Landauer Inc. (a manufacturer of radiation dosimeters).

Remember, the goal here is to create a list of “excellent” firms only 10% of which owe their ranking to luck. It still doesn’t tell you which were the lucky ones. Here, journalism, and perhaps only journalism, can unpack the final puzzle—albeit a journalism that properly understands the role of luck in determining the outcomes that so excite journalists and sometimes prosecutors in the first place. Read story in the Wall Street Journal.