McCombs TODAY

The Hindu, October 16, 2009

Prabhudev Konana is the William H. Seay Centennial Professor and Distinguished Teaching Professor at the McCombs School of Business at The University of Texas at Austin.

There is justified public outrage at the obscenely large executive compensation. Should the government regulate compensations in the private sector even when there is no government money involved?

Let us first consider a compensation method that exemplifies the best in the capitalistic system. Whole Foods, headquartered in Austin, is an $8 billion company selling natural and organic foods and promoting sustainable agriculture worldwide. They have a self-imposed limit on executive salary and bonuses, which is a maximum of 19 times the average salary of all full-time employees. Additional compensation is tied to stock options. The executives benefit if the average salary of employees goes up. The wealthy CEO and founder, John Mackey, takes a token $1 as salary and all his stock-based compensation is channelled to Whole Food’s not-for-profit foundations that do outstanding work all over the world. Read more.

John Sibley Butler, McCombs management professor, director of the Herb Kelleher Center for Entrepreneurship and director of the IC² Institute, recently received the Special Achievement Award at the 2009 Tech Innovation Awards, sponsored by the Austin Business Journal.

In honoring Butler, the Austin Business Journal described his journey: “Butler returned from Vietnam with medals and memories, and went on to earn a doctorate in sociology and organizational science from Northwestern University. Butler joined the University of Texas faculty in 1974 as a sociology professor, but his roles soon changed. At UT, Butler befriended business school Dean George Kozmetsky, who was a decorated World War II Army medic. The two men shared a belief that successful organizations came from the collaboration of ideas from science and the humanities. Butler eventually accepted a joint appointment in management and sociology and then joined the IC² Institute.

“Wealth creation is about going to the laboratories and building a company around a patent for something that solves a pain,” Butler said. “Austin is the best place to be. Dallas and Houston have all kinds of big companies, but Austin is a startup town. I’ve seen this city go from a town where Tex-Mex was considered a growth industry to a place where people can get good jobs and create real companies around forward-thinking ideas.” Read more.

After earning her MBA from McCombs in 1997, Rainey Knudson founded Glasstire, a non-profit online journal about the Texas visual arts scene. Not exactly the traditional MBA career path, but Knudson says her decision to follow her passions of art and writing is what has made her a successful entrepreneur.

McCombs Communications Director Dave Wenger spoke with Knudson about Glasstire’s new journalism model, social entrepreneurship and the sleeper arts scene in Texas. Here’s some of what Knudson had to say:

On gaining credibility:
“What we’re seeing strongly in the past 12 months is a real shift in how people regard websites in arts journalism, obviously across the board, and how people take far more seriously the idea that a great blogger can self edit. They don’t have to have an editor to be taken seriously. And websites are the critical hubs for how everybody gets information for everything, not just the arts. So we’ve seen a huge transition in how things are regarded.”

On the decision to operate as a non-profit:
“Very simply, within about six months of launching Glasstire it became painfully clear this was never going to be a profitable, for profit enterprise. I’d talked with some of the Houston foundations and they said it would be something they’d be interested in looking at if we got our 501(c)(3), which we did. So one of the things with arts journalism now is people are wondering if there is a for-profit model that will work for arts journalism. And there are a lot of for-profit models out there, magazines and a couple of websites, but people are still feeling their way with it.” Read More…

On Sept. 17, Texas Executive Education hosted a faculty panel addressing Strategies for Growth in Trying Times. We captured a few of the highlights on video:

What country is poised to be the next global economic powerhouse?
Senior Lecturer of Management John Doggett spoke about the future of the global marketplace. “We in this country right now are undergoing a navel-gazing exercise of amazing proportions,” he said. “We’re moving into a time where more and more economic activity is going on outside of the United States.” He added “Whether you’re small, medium or large, you’re going to face more competition from countries that you never thought of as competitors.” Doggett said in the next 15-20 years, China will be the largest economy in the world, and India will be “neck and neck” with the U.S. for the second largest economy.

Is this a good time for mergers and aqcuisitons?
James Nolen, senior distinguished lecturer in finance, said that for strategic investors with cash, buying other companies is a good strategy for growth during a recession. Private equity and venture capital is virtually dried up for new investments, and the secondary markets are selling at deep discounts when limited partners want out of current investments.

What should firms do when consumers are frozen by recession?
Raji Srinivasan, associate professor of marketing, explained that recession generally leads to dramatic shifts in the market share of companies. “Companies that are in the top 10% of market share move down to the bottom, and those that are at the bottom move up,” said Srinivasan. Firms who are positioned to survive these turbulent times should consider questioning all operations to look for opportunities that were not viable in normal business cycles.

The open house also included an industry panel with John Hanks - VP, National Instruments; Tiffany Dávila-unne - EVP, BBVA Compass; and John Berra - Chairman, Emerson Process Management, discussed specific strategies they use to navigate turbulent economic times. Click through to see full video of both the faculty and industry panels Read More…

By Dorothy Brady

Florence Atiase, a lecturer in the Department of Accounting, has received the Texas Society of CPAs’ (TSCPA) Outstanding Accounting Educator Award for 2009. The award honors those who have demonstrated excellence in teaching and have distinguished themselves through active service to the accounting profession.

Atiase fits the profile perfectly. Since joining the McCombs faculty in 1993, she has taught a variety of courses at both the undergraduate and graduate levels, including introductory financial and managerial accounting, intermediate financial accounting and financial statement analysis.

Urton Anderson, professor and chair of the Department of Accounting, said, “Florence is truly an outstanding member of the accounting profession who has done much to pass on the values of the profession to a new generation of CPAs.” Read More…

Kelly emphasized how important caring for people is at the airline he has run since 2004 when he became CEO. In 2008 he became chairman, following the retirement of founder Herb Kelleher.

“Southwest Airlines is family-like, which implies love,” he said. The pervasiveness of this warm corporate culture is even captured in its stock ticker symbol: LUV.

As the company’s leader, Kelly said he strives to balance three important areas of focus for the company: low cost, customer service and a focus on people. He acknowledged that the strong customer service culture was deeply embedded when he arrived at SWA in 1985.

“All good stories about Southwest Airlines are because of an interaction someone had with one of our people. We share stories [about customer service triumphs] and celebrate those events,” he said. “They happen over and over.” Read More…

Eric Israel, managing director of forensic and global sustainability services for KPMG, gave a presentation Oct. 6 on how sustainability relates to business value. His talk was part of the MPA Distinguished Speaker Lyceum.

According to Israel, sustainability plays a large role in a company’s value and its outlook for the future.

Israel listed the Carbon Disclosure Project is one example of how important sustainability practices and plans are to investors. The project is sponsored by financial investors and asks Fortune 500 companies around the world to report on their carbon emissions. The investors then use these reports to determine in which companies they will make long-term investments.

Israel stressed that sustainability is not merely compliance with the laws. He argued that sustainability should look beyond the minimums of compliance and plan for the future. Read More…

The Princeton Review’s latest edition of their annual guide to business schools hit bookstores yesterday. “The Best 301 Business Schools: 2010 Edition” gives McCombs high marks in admissions selectivity, career rating and overall academic experience, but we particularly excel in the student-led rankings, where we ranked no. 8 out of 301 schools in the “Best Professors” category. The Best Professors category asked students to rate professors in terms of being both interesting and accessible.

Princeton Review compiled the Best Professors and other lists based on the opinions of more than 19,000 students at AACSB-accredited MBA programs.

So what makes someone a great teacher? We asked Professor of Management James Fredrickson to weigh in. Fredrickson has received multiple teaching awards from McCombs students and has been listed in BusinessWeek as one of the best graduate business school teachers in the nation. Here’s what he had to say:

“Over the years I’ve reached the admittedly simplified conclusion that being a good teacher requires three qualities.

First, you need to be the content or subject expert. If you can’t show yourself to be the expert in the room, you will eventually have no credibility with your students. Second, you need to have enthusiasm for the subject. If you aren’t interested in the subject, you can’t expect the students to be. And third, you need to be interested in the students and whether they learn. If you aren’t interested in them, it will quickly become apparent, and that lack of interest will prevent them from sticking their necks out and taking the intellectual chances that are necessary for them to learn.

In my view, one needs to have all three of these qualities to be a great teacher, and at McCombs we are fortunate that we have lots of people who are real experts in their field, have enthusiasm for it, and care deeply about their students.”

Related Article
Excellence Across the Board: McCombs professors excel in divergent realms of teaching and research, using one to inspire and inform the other.

Ian Wolfman, chief marketing officer for imc2 (squared), spoke on campus Sept. 30 about media convergence and the use of digital media in a presentation titled “Marketing Evolved: Digital Reach and Human Touch in a New Marketing Era.” The talk was presented by the College of Communication’s Department of Advertising as part of its Hearst Visiting Speakers Series.

Wolfman talked mainly about the trend toward media convergence, noting that it’s difficult to pit digital media against TV because of the ability to watch shows and videos online. The two are now interrelated and the question has become, if we’re advertising in video, which platform do we target?

He also talked about the fight to save traditional media, i.e. print, by integrating digital and interactive approaches.

QR codes, small barcode-like images, are being inserted into magazine ads and billboards in Japan as part of Coca-Cola’s new marketing strategy. Smartphone users can download an application to take a picture of the codes, which will then take them straight to the brand Web site or offer them a chance to receive a discount on a product. Read More…