http://www.tuck.dartmouth.edu/news/articles/ en Sarah.A.Jeror@tuck.dartmouth.edu Copyright 2012 2012-02-17T15:27:58+00:00 http://www.tuck.dartmouth.edu/news/articles/pepsicos-derek-yach-delivers-business-and-society-conference-keynote/ http://www.tuck.dartmouth.edu/news/articles/pepsicos-derek-yach-delivers-business-and-society-conference-keynote/ Take, for example, Pepsi’s Performance with Purpose initiative, which aims to reduce the amounts of salt, sugar, and saturated fat in its products while increasing its portfolio of healthy, whole foods and reducing its environmental footprint. Using more fruits and vegetables means learning the intricacies of new supply chains; more dairies could mean more methane emissions; and new crops raise questions about water use and labor conditions. All of these things have the potential to send the finance and operations divisions into heated debates. Yet they also pose new opportunities for profit and cost savings. “Increasingly our teams understand how shifts in the nutrient profile of foods and beverages create new business opportunities,” Yach said during his keynote address at the 10th annual Business and Society Conference, Feb. 9-10. “We were well placed to take advantage of our food formulation work over years in Mexico when a new law requiring stricter standards on school meals came into force. And many of our advances in reducing fossil fuel use in our large truck fleet; in approaching zero waste; avoiding national electrical grid use; and attaining positive water balance in our Frito Lay California plant are actively sought after by other companies.” The lesson—that corporate sustainability is complicated but can spur profits—fit in well with the conference theme, “Trading Off: Impactful Business Strategies in Uncertain Times.” In addition to Yach’s speech, the two-day event featured sessions on social impact as strategy, investing for impact, driving change in the energy sector, and trading profit for health care. Dean Paul Danos launched the conference with some thoughts on the tension between a tepid economy and the growing concern with the effect of business on society and the environment. In recent years, companies have invested money and manpower in broadening their social responsibility profile, “but just as all that momentum comes, we’ve had a downturn,” he said, “and then companies have to compete for internal resources. That’s what this conference is all about: How do you walk that tightrope between the imperatives of cost and profits and regulatory settings and yet really make deep progress on sustainability?” Yach, a South African epidemiologist who specialized in non-communicable diseases, made remarkable progress on a different kind of sustainability—human life—when he helped the WHO design and implement the Framework Convention on Tobacco Control in 2003. The framework set strong limits on how tobacco companies could sell their products around the world. It was a big win for global health, but one he could not repeat in the fight against obesity-related diseases. In that forum, Yach tried to insert recommendations on salt and sugar intake into the WHO’s new dietary guidelines. The food industry, however, flexed its lobbying muscles and killed the proposal. A few years later, PepsiCo CEO Indra Nooyi asked Yach if he could do for Pepsi what he tried to do for the WHO. Departing from the usual career track of a public health professional, Yach agreed to join Pepsi. By helping the company, which serves 3 billion people per year, reduce the sugar and salt in its products by 25 percent by 2015, he will arguably have more impact there than he would have at any state agency or non-governmental organization. Addressing the audience in the Georgiopoulos Classroom in Raether Hall, Yach used two high-profile reports to illustrate the difficulties and opportunities inherent in the move toward sustainable development. A 2012 report by the United Nations’ Panel on Global Sustainability, which is chaired by the presidents of Finland and South Africa, stated that “efforts to reach social and economic targets are hampered by both the inability to agree on decisive and coordinated action…and by unmet commitments for financial support.” A McKinsey report was a little more optimistic, detailing $2.9 trillion in savings that companies could capture by improving resource productivity. “The contrast between the U.N. report and the McKinsey one highlights a fundamental difference in how the U.N. and the private sector frame issues,” Yach said. “The U.N. report is one of deep gloom that will only be overcome by tens of government actions. McKinsey spelled out opportunities for investment where business and society would benefit.” Based on his experience at PepsiCo, Yach tends to align closer with the McKinsey report. But he was careful to explain that businesses, acting alone, won’t move quickly enough toward sustainable operations. Through financial incentives and disincentives, governments can help make the right choices the easy choices. “For the food industry,” he said, “this approach would help if it could lead to…public investments in health research that correct the imbalance in favor of pharmaceutical solutions to nutrition and related health problems, and toward research aimed at developing sustainable food and agricultural solutions.” This line of reasoning could also extend to fiscal reporting. Yach said he agreed with the likes of Al Gore and Harvard Business School professor Michael Porter that the Securities and Exchange Commission should abandon quarterly earnings statements—they make companies too focused on short-term profits—and implement uniform sustainability metrics in annual reports. “These norms will codify what business has known for decades: their license to operate is granted in perpetuity not for the short term,” he said. “Corporate survival and growth over the long term requires that they share stewardship over the environment and the promotion of health with government and communities.” News, Tuck Today iPad app, 2012-02-17T15:27:58+00:00 http://www.tuck.dartmouth.edu/news/articles/new-year-new-governance-rules/ http://www.tuck.dartmouth.edu/news/articles/new-year-new-governance-rules/ Eckbo explains that the U.S. legal and governance rules deprive shareholders of essential rights, which are available throughout much of Europe and in particular in the U.K. Without these rights, he says, U.S. shareholders are relatively powerless against the decisions of officers and directors. Such powerlessness can erode trust and confidence in business judgments rendered at the highest level of a firm’s hierarchy—judgments that often have large impacts on a firm’s value. He is arguing for changes that would put the owners of a corporation—its shareholders—in a better position to both trust corporate boards and steward their personal investments. The most powerful lever for change, Eckbo says, is a reform of the U.S. director election system. Currently, directors are elected via a plurality of votes, submitted by shareholders on proxy voting cards. Director candidates are nominated by the firm, and shareholders can vote either “yes” or “abstain” on the proxy card. There isn’t a “no” box, and “abstain” doesn’t count as “no.” Thus in principle, a single “yes” vote can get the directors elected. Naturally, this system fails to promote shareholder confidence in elected directors.  To make matters worse, the firm’s insiders often nominate directors. “If I’m the CEO and ask you to serve on the board, and you’re elected,” Eckbo says, “you’re going to look at me as the guy who hired you, not the shareholders. And you would be right.” How is this system going to promote shareholder protection as it was originally intended to do? By contrast, many European countries not only allow shareholders to form election committees and nominate directors, but shareholders can also vote “no.” Moreover, directors are often up for election on an annual basis, as the U.S. tradition of staggered board elections (where you elect only one third of the board each year) is either frowned upon or directly outlawed. Over the past 10 years, the Securities and Exchange Commission—the agency that regulates public corporations and makes rules about their governance— has twice seriously considered fixing parts of the election system. The first time, under the George W. Bush administration, the SEC commissioners ended up rejecting a proposal to let large shareholders (those holding at least 5 percent of the equity) access to the proxy voting card (by writing in a competing slate of director nominations). The commissioners, who are political appointees, felt the change represented too large an increase in shareholder power. However Mary Schapiro, the current chairwoman of the SEC, revisited this reform issue in 2010 and advocated for a similar proxy access reform. This time, Schapiro’s proxy access proposal was passed by the SEC by a 3-2 vote, with the two Republican commissioners objecting. But then the Business Roundtable and the U.S. Chamber of Commerce sued the SEC and won, claiming that SEC didn’t fully consider the costs and benefits of the rule change (a time-tested delay strategy when a federal agency is alleged to have overstepped its boundaries). The SEC may appeal the decision this year, but Eckbo isn’t optimistic. “The paradox is that although the director election system is malfunctioning,” Eckbo says, “U.S. corporate law continues to treat the board as representatives of shareholders.” The courts simply refuse to recognize the agency problem. This attitude is clearly expressed in the so-called “business judgment rule,” which holds that the court will not second guess a board’s business judgment (and therefore its business decisions) unless directors breach their fiduciary duties to the corporation. These are duties of care and of loyalty. “The standards for satisfying these duties are low,” says Eckbo. Suppose the board receives a takeover bid and decides to “just say no.” The court won’t question this decision as long as the board met and discussed the takeover proposal, preferably with input from a consultant.  Why does the court take this generous view toward directors? “Because the assumption is that boards effectively represent shareholders,” Eckbo explains. “The message seems to be: If you (the shareholders) don’t like what the board is doing, elect new directors.” So when the election process is rigged against shareholders, the system fails. Of course, shareholder exasperation with a malfunctioning election system breeds costly dissent and attempts to interfere with board decisions anyway. “We see this in the so-called ‘say on pay’ movement,” says Eckbo. “This movement is designed to have the annual shareholder meeting consider and formally approve top executive pay. It’s not that shareholders understand better than the board how to set the pay—they don’t—it’s all about mistrust of the board created by a sense that directors fail to represent the owners.” But the picture is not entirely bleak. The past decade has brought definitive governance improvement through the growing acceptance of the idea that the CEO ought not to also hold the position of chairman of the board. “This development has in part come about by pressure from large foreign investors, who are neither used to nor willing to accept the uniquely American tradition of combining the two top positions in the firm,” says Eckbo. After all, a major function of the board is to hire, fire, and set compensation for the CEO. “It’s harder to do that properly when the CEO is also the chairman of the board,” says Eckbo. “Combining the chairman and CEO roles amounts to a built-in conflict of interest in the board. Fortunately, this tradition is now on the way out. In many foreign jurisdictions, combining the two roles is actually prohibited by law.” What’s at stake in the modern governance reform movement is corporate directors’ and officers’ unfettered power to run the companies they represent. “They see little reason to voluntarily give up this power,” Eckbo says. “If you push them on it, they push back with statements like ‘why change the game—after all, we’re the most productive economy in the world.’” For Eckbo, this argument can be misleading. “Yes, the U.S. is the most productive economy in the world, but in part that’s due to the opportunities for huge scale in the economy not available to smaller western nations,” he opines. “The economy runs on the ability to create and develop new inventions—which boards have very little to do with. Moreover, when the innovations hit big, you don’t need a superstar board for the huge U.S. consumer market to kick in. In sum, it’s far from clear that the success of U.S. firms can be attributed to board structures.” He continues: “The real test of boards comes not when companies are doing well, but when the opposite happens. Suppose a firm becomes financially distressed and the best course of action is to initiate a merger with a financially healthy company.  If the merger means that the directors and top executives will lose their coveted jobs (and research shows that they typically do), then the question boils down to whether they will actually think like shareholders and sell, or like employees and fight the sale. We need a director election system which guarantees that, when the house is on fire, top executives will do what’s in shareholder interest.” Faculty, News, Tuck Today iPad app, 2012-02-16T15:16:22+00:00 http://www.tuck.dartmouth.edu/news/articles/pricing-the-news/ http://www.tuck.dartmouth.edu/news/articles/pricing-the-news/ As newspapers have discovered the stark reality that advertising revenues alone don’t cover the costs of producing the news online, they’ve slowly started stashing their stories behind pay walls. The London Times and Sunday Times did it in 2010, The New York Times created a 20-article per month threshold in 2011, and the Chicago Sun-Times followed suit earlier this year, just to name a few. But setting the price for online news is no simple task, says Praveen Kopalle, a professor of marketing at Tuck and an expert on pricing strategy. That’s because newspapers exist in a two-sided market: they get income from both readers and advertisers. Furthermore, the two sides are irrevocably intertwined, with the demand from the readers affecting the demand from advertisers, and vice versa. In other words, newspapers are a classic example of a network externality: a situation where a product’s utility depends not only on its use by the consumer, but on how many other people are also consuming the same product. “If I’m the only one with a phone,” Kopalle says as an analogy, “who am I going to call?” To get a feel for the tricky dynamics of the newspaper economy, consider these axioms: Advertising revenues will increase when the number of readers increases. The number of readers will depend on the price they must pay to access the information. The price charged to readers depends in part upon the revenues from advertisements. More advertisements can lead to lower prices for readers (and thus more readers), up to a point, but too many ads detracts from the reading experience and drives readers away. Kopalle makes sense of these interrelated truths by organizing readers and advertisers according to the benefits they get from the transaction. The most common and most interesting scenarios occur when (a) the benefit to advertisers is high (because of more readers) but the benefit to readers from ads is low; or (b) the benefits to both readers and advertisers are high. The first scenario is akin to what The New York Times and other newspapers must deal with—advertisers like having millions of eyeballs see their ads, but people don’t read newspapers for the ads. So these newspapers takes great care in finding an article threshold and price that both brings in enough revenue and doesn’t reduce readers. They also try to find just the right number and type of ads: enough to pay the bills, but not so many as to be obnoxious or annoying. The second scenario is in play with magazines like Vogue and GQ. People read these magazines, in part “so the ads can tell them what kind of lifestyle they should be living,” Kopalle says. These readers also happen to be affluent. It’s a win on both sides: the advertisers can engage with a rich, targeted clientele, and the readers actually enjoy flipping through 20 pages of advertisements before getting to the table of contents. What’s made the business model for online news even more difficult is that many papers, The New York Times included, gave their content away for free for many years, and many still do. “That sets the reference price in readers’ heads to zero,” Kopalle says, “so when you put up a pay wall, anything you charge becomes more than the reference price.” Basic economics dictates that when price goes up, demand goes down, and that’s especially the case “when you have conditioned people to a price of zero,” asserts Kopalle. The question then becomes: How do newspapers with new pay walls stem the decrease in readers? For Kopalle, the answer partly lies in educating the consumer. “You must stress to people the value of the product,” he says, “and that the reference price should not be zero.” Equally important is bringing the interests of advertisers and readers into a closer balance. That can happen, Kopalle says, when the advertisements are more targeted to the readers. Thanks to social media and data analytics, targeting readers with the content and ads they might like is much easier.  But Kopalle stresses that it must be more seamless than pop-up ads or a picture of the shoes you browsed at Zappo’s last week. “It has to be more creative and integrated,” he says. “Something like a narrative.” Perhaps it will give a new meaning to “news you can use.” Faculty, News, Tuck Today iPad app, 2012-02-06T18:10:58+00:00 http://www.tuck.dartmouth.edu/news/articles/what-to-expect-from-technology-in-2012/ http://www.tuck.dartmouth.edu/news/articles/what-to-expect-from-technology-in-2012/ The Consumerization of Information Technology Information workers: Say goodbye to having two sets of computers and phones—one for your personal use and another for the office. They are being melded together by a phenomenon known as the consumerization of IT. Increasingly, people are ditching their corporate-issued BlackBerrys for their personal Android phone, or are shunning their ThinkPads for their iPads. And, in many instances, corporations’ IT departments are going along with it. Historically, consumer technology wasn’t as good as what you could get at work. “That’s changing very quickly,” Johnson says. “Very inexpensive devices brought to market for the consumer, with better usability functions and social media, are more powerful than what you have at the office.” Some companies still limit consumer devices, citing security concerns, but others have given their employees a budget and told them to buy whatever computer they want. Look for more of the latter in the coming year. Mobility In general, mobile technology is an old story—who doesn’t have a smartphone or a tablet these days? What’s new is their capabilities. Now, mobile devices have as much computing power as the laptops of 2009. Plus, the cloud has enabled these devices to do more with less space than ever before. For corporations, the power of mobile computing has opened up new forms of interaction with their customers and employees. More and more companies, for example, are developing their own apps for different constituencies. Instead of a catalog, customers can browse a firm’s products through an app; instead of emailing technical bulletins to engineers, a construction company can put all the information on its internal app store. As it stands today, most apps flow to users through the iTunes App Store or the Android Market. That will change with the more widespread adoption of HTML5, a computing language for the Internet that enables an app-like experience through web browsers. The advantages of this app-in-a-browser are at least two-fold: app developers won’t have to create multiple versions for the Apple and Android operating systems; and it will allow a more seamless experience for business transactions within a web page.  “There’s a lot of reason to believe that apps as we know them could be overtaken by HTML5,” Johnson predicts. “I think it’s going to be huge this year.” Social Media More nuance here. Johnson doesn’t expect any new social media platforms emerging in the near future. Instead, we’ll see social media popping up in more places. “Social will become a feature of almost everything,” Johnson says. One example: The divide between personal and corporate social media is being bridged by sites like Chatter, which incorporates a Facebook-like feel into the daily workflow. Perhaps the bigger story in social media is the process by which the world explores its possibilities. For instance, transacting through Facebook is not an elegant experience today, but that may change. “For a branded company like Nike, that’s a big deal,” says Johnson. “They’re trying to decide where to be so that it’s easiest for customers to get their products.” They’d like to see a Facebook where a picture of Jay-Z in Nike gear is a seamless gateway to buying those products on Nike’s e-commerce site. Cloud Cloud computing “went through a giant hype cycle last year, and now it’s becoming real, very fast,” Johnson says. What that means is that more and more consumers will be storing music, photos, and documents in cloud-based services such as Dropbox, iCloud, and the Amazon Cloud Drive. For the business world, the cloud has first meant “virtualization,” or the creation of proprietary clouds of servers and computers that can be shared within an organization. What’s next is the public cloud, and Johnson says companies will move aggressively into that space this year. The cloud has also changed the face of entrepreneurship. “No one is doing a startup that’s not in the cloud,” Johnson says. “The days of buying a server and configuring it—that’s over.” Big Data As the name implies, the Big Data phenomenon is all about the unfathomable amount of information being generated and stored on the Internet. Sometimes this data is just out there, waiting to be collected. Other times, it’s owned and stored privately. In either case, its value for analysis, trend-spotting, communication, marketing, and more is just now being realized. Why now? For one thing, the “Internet of things”—devices linked to web and collecting data—is growing bigger everyday. Second, the supercomputing it takes to sift through these rivers of bits is cheaper and more readily available. The bottom line: Brace yourself for a world where computers tell you what you like and what to do—accurately. “Predictive analytics are often more reliable than our own judgment,” Johnson says. “When you’ve got the data and can grind away at it, machines can do much better than humans.” Faculty, News, Tuck Today iPad app, 2012-02-01T13:13:04+00:00 http://www.tuck.dartmouth.edu/news/articles/300-house-design-workshop/ http://www.tuck.dartmouth.edu/news/articles/300-house-design-workshop/ That was the warning from Dartmouth President Jim Yong Kim to a group of Tuck School of Business students, engineers, and designers who gathered at the Georgipoulos Classroom in Tuck’s Raether Hall January 25 for the start of a four-day workshop to implement Tuck professor Vijay Govindarajan’s challenge to design a $300 house for the world’s poor. “The narrative goes something like this: These people are poor because they deserve to be poor, every effort I’ve made to lift them out of poverty has failed,” said Kim, in his keynote address launching the $300 house design workshop. “Who the hell are you to come and tell us that something we know to be is impossible is possible.” The stew of charities, for-profit contractors, and donors that comprise the modern foreign aid industry can be no less bureaucratic, territorial, and inflexible than the largest corporations. Innovation requires the determination to go against the crowd. Govindarajan, the Earl C. Daum 1924 Professor of International Business, and co-author Christian Sarkar’s 2010 Harvard Business Review blog post challenging the corporate world to design a $300 house that could provide clean water, shelter, and solar electricity to the world’s poorest has generated a spectacular response. The Economist, CNN, and The Guardian all published laudatory stories of the project while two critics of the contest were featured on The New York Times editorial page. A social networking site for the project now has 2,500 members. The workshop brings together students, designers, planners, engineers, health care providers, business thinkers, and members of two communities in Haiti to develop design prototypes that will provide low-cost housing for those currently served by conventional housing programs. The plan is for work on the prototypes to continue beyond the workshop and eventually develop into pilot projects in Haiti. Kim is well positioned to speak on the challenges of aiding the poor. As a Harvard medical student in the 1980s, he co-founded Partners in Health, an aid agency that now has more than 11,000 staff across the globe from Siberia to Lesotho.  The application of management practices to aid work is badly needed, said Kim. When businesses execute poorly, they’re eventually driven out of the market. Not so in the social sector. So long as non-governmental agencies can continue raising money they can continue operating. For decades aid work was judged in moral terms, whereby agencies could declare success simply in demonstrating that they cared about the poor and were making an effort to help them. “When it comes to our most cherished social goals, we cherish executing poorly, we celebrate not knowing what our budget is or what our outcomes are,” said Kim. “I would argue that if you’re really, really committed you hold yourself to a very high standard of execution and outcome.” In comparison to the private sector, aid groups also do a poor job of exchanging information about how to work more effectively. “The little tricks that airline companies know to be more effective are published everywhere,” said Kim. “The little tricks to deliver medicine to poor people more effectively aren’t shared anywhere.” The design of the $300 house won’t prove a magic bullet in and of itself, Kim said. The key is in how the innovation can be delivered to ensure the best outcomes for the poor. Eradication of a disease that affected 50 million people each year in the 1950s came about not only because of the development of the smallpox vaccine, but because of enormously successful management of an eradication program that focused on targeted vaccinations of those most likely to have come in contact with the disease, he added. As in business, listening to your consumers—in this case the world’s poorest—is key to a winning strategy. Years ago aid agencies attempted to introduce solar bread ovens. The only problem: many of the people it was designed for didn’t like bread. “People who were starving would come to us and say we can’t eat this,” said Kim. “A preferential option for the poor is very different from a preferential option for your idea.” The housing project can succeed if those working on it can adopt ideas from their consumers while ignoring doubts from the aid establishment vested in the status quo. “You’ve got to believe not only that it’s doable,” said Kim, “but you have to do it in the face all of all those people sitting in hotel bars in poor countries telling you its impossible because if it was possible they’d have already done it.” Curriculum, Faculty, Health Care, International Business, MBA, News, Students, Tuck Today iPad app, 2012-01-26T19:27:01+00:00 http://www.tuck.dartmouth.edu/news/articles/from-the-ground-up-1/ http://www.tuck.dartmouth.edu/news/articles/from-the-ground-up-1/ Now comes the messy process of turning the country into a place with human rights, transparent government, and open commerce. Few people know more about what that transformation will take than Diederik Vandewalle, an adjunct associate professor of business administration at Tuck who teaches a mini-course on doing business in the Arab Gulf states. One thing’s for sure: Unlike other developing economies, money won’t be a problem. In addition to the constant income from oil, it’s estimated that $180 billion in assets frozen during the revolt will soon be flowing back into Libya. “The challenge will be the efficient use of money in a system where corruption and lack of regulation was rife,” Vandewalle says. Vandewalle, who is also an associate professor of government at Dartmouth College, has studied Libya closely for the past 25 years, and 2011 was an especially busy time. Since the country was freed from Gadhafi’s grip, Vandewalle has been consulting almost non-stop with a wide variety of companies and international organizations. As a new Libyan government fills the vacuum of power, he has been asked the same basic question again and again by business leaders: If we make an investment today, how much certainty do we have that we’ll still be able to operate two years from now? “It’s a very interesting question,” Vandewalle says. “On the one hand, I’ve worked for a while on Libya and I’m very hopeful that the country will do well. But on the other hand, I’m also very aware of the pitfalls, and I’m a little worried about what’s coming down the pike, mostly about the enormous inflows of capital that make economic management more difficult.” How would you characterize the business environment in Libya when Gadhafi was in power? One of the major problems was that in principle there were some legal stipulations about how to do business, how the oil companies had to invest, and so on, but in reality, of course, all of that was circumvented by the fact that Gadhafi and his family and a very close circle of friends were really dominating and controlling just about any contract that was signed.  There was no accountability and virtually no transparency or rule of law. What kind of government has been put in place in Gadhafi’s absence? When the rebellion was still taking place, there was a transitional national council (TNC). It has now appointed a cabinet. So, in principle, they do have a government in place, but that is still not an elected government, it’s appointed. It is not seen as truly legitimate by some actors. But the really big problem for Libya is that the central government still doesn’t have the power to impose its will. There are literally hundreds of militias with their own arms and leaders that just kind of run amok in many ways. What has to happen in order for a vibrant and diversified economy to emerge? First, you need the rule of law. Second, you really need a neutral and professional bureaucracy that can guide investments and provide information. Linked to that, you need an educated workforce that can deal with these issues. The teaching of English was forbidden for long periods of time, and so you get to talk to these people who are supposedly in charge of major companies, who barely speak English. Finally, the banking sector will need to be built up. The country will want to build an Islamic banking system, and it will be very interesting to see how much money flows into that system and how they will deal will the pre-existing contracts that contradict Islamic banking principles. What are the business opportunities in a new Libya? There is a whole range. Beside the oil sector, there are companies lining up that want to go into educational ventures, manufacturing and tourism—Libya has some of the most beautiful Roman and Greek ruins in the entire world that have never really been exploited for commercial purposes. Literally, there is investment and expertise needed across the entire economy. You’re teaching a mini-course soon on doing business in the Arab Gulf states. How does that region differ from North Africa? In a sense, they’ve been outside the Arab Spring. They’ve used an enormous amount of money to simply keep people politically quiescent. The Arab Gulf states have spent up to $150 billion since last year, when the troubles started, to assure their population that the government is still here to provide for them, which keeps them quiet. Do you see a form of democracy taking shape in Libya? There are a lot of people, including myself, who say we need to be careful of simply having a veneer of democracy without having the necessary consensus and institutions. Otherwise what you end up with is hollow electoralism—yes, you have elections, but they don’t really mean anything. The Libyans have thought about that very carefully and are considering the best democratic system within the kind of political culture they live in. No matter how you provide transparency and accountability, that is major progress for a country like Libya. How long do you think it will take for the legal and economic systems to mature? That’s what a lot of companies want to know. My hunch is that it really depends on one major factor: to what extent the government can really get power centralized and do away with these militias. If they can get the order issue sorted out, I think they can move forward within a year. Economics, Faculty, International Business, News, Tuck Today iPad app, 2012-01-25T14:23:49+00:00 http://www.tuck.dartmouth.edu/news/press-releases/dartmouth-president-jim-yong-kim-to-give-keynote-address-to-open-300-house/ http://www.tuck.dartmouth.edu/news/press-releases/dartmouth-president-jim-yong-kim-to-give-keynote-address-to-open-300-house/ On Wednesday, January 25, Dartmouth College President Jim Yong Kim will deliver the keynote address at the Tuck School of Business to launch a four-day design workshop for the $300 House Project, a concept developed by Tuck Professor Vijay Govindarajan. In the fall of 2010, Govindarajan developed the $300 House concept and began a blog  to initiate a dialogue on proposed solutions to develop low-cost housing for the poorest populations in the world, those who are not currently served by any conventional housing programs. Since the initial concept discussion, students, faculty and staff from Tuck, the Thayer School of Engineering, Dartmouth’s Studio Art Department and the Center for Health Care Delivery Science have collaborated on the $300 House project.  “Over 70 million people – the size of the United Kingdom – live in pavements with only sky as their roof,” Govindarajan said. “Is this right? Even insects and spiders have houses. Housing is a human right. Any nation which cannot house and look after its own people is a failed nation. It doesn't have to be that way. Businesses, governments, and NGOs must work together to solve this wicked problem.” The four-day workshop will bring together students, designers, planners, engineers, healthcare providers, business thinkers and members of two communities in Haiti with the goal of integrating the best aspects of their ideas into a single prototype house for rural areas or densely populated urban slums. The project aims to expand into pilot projects in Haiti. The address on the $300 House Project is open to the public and will take place at 4:30 p.m. on Wednesday, January 25, in the Georgiopoulos Classroom in Raether Hall at the Tuck School of Business. It will focus on connections between innovative thinking, the provision of decent, affordable housing for the poorest populations of the world and the role such development plays in the improvement of health, economic stabilization and development. Kim took office as the 17th president of Dartmouth College on July 1, 2009. He is the first physician to serve as Dartmouth’s president; a co-founder of Partners in Health (PIH) and a former director of the Department of HIV/AIDS at the World Health Organization (WHO). He has dedicated himself to health and social justice work for more than two decades, helping to provide medical treatment to underserved populations worldwide. 2012-01-23T14:32:52+00:00 http://www.tuck.dartmouth.edu/news/articles/a-grueling-journey-complete/ http://www.tuck.dartmouth.edu/news/articles/a-grueling-journey-complete/ For the trio of men, who make up the Polar Vision team that’s raising money and awareness for the visually impaired, it was the culmination of two years of training, planning, and fundraising, and the final execution of the trip couldn’t have gone much better. They arrived at their destination on time and without injuries, and thus far have raised more than $25,000 for the charities Sightsavers and Guide Dogs for the Blind. Back home in England and catching up on loads of laundry, Smith reflected on his accomplishment. “It’s a weird roller coaster of emotions,” he said. “I was elated to be out there, but at times I wished I were somewhere warm. Now I’m done and I’m thinking, What’s next?” For the time being, Smith is looking forward to returning to Boston and to his job in the private equity group at Bain Consulting. He started there in September and took a leave of absence at the end of November to make the journey to the southernmost point on earth. “I’m excited to get back to work,” he said. The desk job will likely seem easy compared to their expedition across the ice. To start the adventure, the team boarded a midnight flight to the Antarctic coast from Punta Arenas, Chile, on November 26, and set off on skis the following day. They were challenged at first by the monotony of the barren landscape, but soon overcame that with a bit of symmetry: a daily routine. They broke the days up into six “marches” lasting an hour and 15 minutes each, with a 10- to 15-minute break in between. With the exception of Lock, who is legally blind from macular degeneration, they took turns navigating: McKeand did the first and fourth shifts; Smith took the second and fifth; and Jensen the third and sixth. The routine continued when they set up and broke down camp, with each person doing specific jobs every day. For the first 10 days, the weather was on their side. The temperature hovered between 20 and 30 degrees Fahrenheit—balmy, by Antarctic standards—with blue skies and not a lick of wind. But it couldn’t last. Soon, storms blew in, bringing days of complete whiteouts and a stiff wind that was never at their backs. On these days, they couldn’t use the standard strategy of finding a snow feature and skiing toward it for five minutes. Instead, they had to shuffle, feet unseen in the white fog, according to the bearing on their compasses. This was complicated by the presence of sastrugi—jagged, three-to-five foot snow mounds formed by the wind. With Lock in tow, they had to navigate around these obstacles carefully. “We’d create a V-formation around him,” Smith explained, “with one person in the lead with the compass and two people flanking Alan on either side.” When they reached the South Pole on January 3, they were happy to find the structures erected for the celebration of the 100th anniversary of the Amundsen and Scott expeditions, which made it to the pole on December 14 and January 17, respectively. Being right in the middle of those two dates, “we had the pole all to ourselves,” Smith recalled. They took plenty of photos at the Ceremonial South Pole, ringed with the flags of nations, and were invited inside the Amundsen-Scott South Pole Station, a research facility built by the United States. {media1}“Tuck was a huge part of our success,” Smith said. “There is no way on earth I could have done this had it not been for my MBA experience.” Help came in the form of major financial backing for the operational expenses by Daniel Revers T’89 and another anonymous alumnus. One of the team’s biggest equipment sponsorships came from Iridium, the maker of satellite phones and equipment. That sponsorship, which included two phones, Wi-Fi access points, and unlimited minutes, came through the Tuck network. In addition to that practical assistance, Smith said being at Tuck gave him the leadership skills and confidence to achieve a goal of this scale. “You’re driven to succeed because of the other people doing the same thing,” he said. “When you’re in this high-performing environment, it rubs off.” Their mission accomplished, the Polar Vision team is now focusing on sharing its experiences with the world, through speaking at conferences in Norway and the U.S., and by creating a documentary film about their trip. They’re looking at their expedition as an asset that can keep paying dividends. “We have to think about how best we can use this for our sponsors, the stakeholders in Polar Vision, and the charities,” Smith said.   Alumni, Leadership, MBA, News, Students, Tuck Today iPad app, 2012-01-13T19:28:17+00:00 http://www.tuck.dartmouth.edu/news/articles/to-get-a-job-tell-a-story/ http://www.tuck.dartmouth.edu/news/articles/to-get-a-job-tell-a-story/ The most recent example of this was the Recruiting Kickoff event organized by the Career Development Office. In the first segment of the day, Paul Argenti, a professor of corporate communication at Tuck, presented a talk entitled, “The Art of the Narrative.” During the 90-minute session, Argenti showed students how to strategically tell the story of their life and career search during a 20- to 40-minute job interview. After that, students met up with their new study groups for peer mock interviews facilitated by alumni and staff, a time when they could practice Argenti’s interview tips and demystify the whole interview process. The Recruiting Kickoff took place about halfway through the school year, but well after first-years have begun preparing for the summer job search. That process actually starts during the summer before they first arrive at Tuck, when they are encouraged to start writing their resumes and contemplate career options. During first-year orientation, students are briefed on the road map and rudiments of a job search. Fall term is full of company briefings, career treks, networking, and events like Sector Smarts, where alumni speak to students about what it’s like to work in different industries. During the second half of the fall term, students get advice about drafting their cover letters and resumes, and begin applying for summer jobs in earnest. The actual interviews happen on campus in late January and early February, while off-campus interviews can run through the end of the school year. In any event, 100 percent of first-year students get summer internships. All of which means the Art of the Narrative came just in time to get first-years primed for their upcoming interviews. Argenti frequently consults with major companies on how to tell their stories in good times and bad, and he said many of the rules he uses in that forum also apply to the job interview. Rule No. 1: think strategically. “You need to remember what your role is as a communicator,” he told the students. “Ultimately, it’s to convince them to hire you.” From the recruiter’s perspective, a flurry of interviews is an elimination process, a whittling down of the pile to a few core candidates. To stay in that pile, said Argenti, you need to organize your life into a coherent narrative with emotional and intellectual resonance. Fair or not, the interviewee’s chance to tell this story usually comes right at the beginning of the interview, during what Argenti calls the “getting to know you” period. “This might seem like throwaway time,” Argenti said, “but we know from talking to executive recruiters that their decision is made within the first one or two minutes. They make up their mind immediately.” The best way to take advantage of these crucial first minutes is to have a succinct but well thought out summary of your life before, during and after college, and how those experiences and decisions led you to the interview. “Everything you talk about should be related to one goal: convincing them you’re the right person to do the job,” Argenti said. If you’re successful, not only will the story be authentic and logical, it will fix your interview in the mind of the recruiter so he or she won’t forget you. Beyond the edict of selling yourself through a compelling narrative, acing an interview also comes down to a few simple guidelines, Argenti said: be positive, be direct, listen carefully, have a few questions to ask, be careful about your non-verbal behavior, and dress appropriately. “This is kind of like a blind date,” he said. “You really want to impress this person and be called back.”   Alumni, Careers, Faculty, News, Students, Tuck Today iPad app, 2012-01-13T19:26:44+00:00 http://www.tuck.dartmouth.edu/news/articles/research-highlights/ http://www.tuck.dartmouth.edu/news/articles/research-highlights/ {media1} More is Less One problem for firms like General Electric or IBM that focus on sales to businesses is that many of their divisions have independent marketing and sales teams who often target the same customers. So even as a salesperson in one division is paying a call on a business client, that same customer may have a pitch from a different division of the company in his inbox and a voicemail from a sales team member in a third division. Tuck assistant professor Y. Jackie Luan examines the wisdom of this approach in new research that mines 16 months of data from a high-tech company. It is often taken for granted that additional contacts from different specialized sales teams should increase sales because it increases the chances of identifying a customer’s needs. Instead Luan finds that greater “breadth” of marketing contacts, as measured by the number of different internal marketing teams in contact with the same customer, actually harms lead generation and final sales performance. That may be because the varying marketing messages harm the firm’s brand, confuse the customer, or are in conflict with each other. Luan’s research shows that companies should focus on improving marketing depth—the level of customer interactions with a particular marketing theme or benefit positioning. When it comes to selling multiple products to businesses, a few well-targeted, well-coordinated marketing programs may be better than a greater number of less effective ones. Can Decentralized Marketing Communication Hurt B2B Sales? Evidence from a Field Experiment {media2} Quality’s Components Defining quality can be as subjective as coming up with a definition for obscenity. “I know it when I see it,” former Supreme Court Justice Potter Stewart once wrote of the latter. The same could be said of how firms and people perceive quality: engineers tend to view it by defining how well a product conforms to design specifications. Customers, however, judge a product by how it compares with their individual expectations, a much fuzzier standard that is shaped by factors like other customers’ perceptions, advertising, and emotions. To sharpen the focus, Tuck professor of marketing Peter Golder and his co-authors have come up with a three-pronged definition of quality drawing from divergent areas of business research that he hopes will help firms better manage customer satisfaction. The first part of the definition relates to a product’s “produced-attribute quality,” or conformity to design specifications. A second component is its “evaluated-aggregate quality,” which measures how the product’s perceived performance aligns with the customer’s ideal expectation. The final is its “experienced-attribute quality,” a little-researched concept that measures how much delivered quality is actually perceived by the customer and how that conforms to a customer’s expectations. Golder’s integrated definition may help researchers understand why improving product attributes often has little or no effect on customer satisfaction. In some cases, companies are better off investing in managing their customers’ expectations or influencing customer’s emotions. Customers may not actually know quality when they see it, but they can be prompted to believe it exists. What is Quality? An Integrative Framework of Processes and States {media3} Valuing Innovation Stock markets do an uneven job at valuing research and development. How else can companies with poor records of converting research spending into saleable products be priced similarly to star innovators? New research by Tuck associate professor Karl Diether shows that by tracking past performance and research and development spending, future sales and patents can be accurately predicted and are relatively simple to compute. Take Texas Instruments, a company that invented the handheld calculator in 1967, developed the first single-chip speech synthesizer in the 1970s (used in its popular Speak & Spell toys), and defined the market for graphing calculators in the 1990s. Its record should have allowed Wall Street to forecast the company’s success in developing new chips for wireless videoconferencing and the mobile Internet in the late 1990s after years of heavy investment. Indeed, Texas Instruments’ stock price more than doubled between July 1998 and July 1999. But firms like Merrill Lynch and Prudential were late in upgrading the stock, doing so only after the company announced major deals with equipment-makers like Ericsson and Compaq. Diether found that a strategy based on buying companies with good R&D track records while short-selling companies with inefficient returns yields about 11 percent annually. Misvaluing Innovation Faculty, News, 2012-01-06T19:24:42+00:00