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Winter 1998
A l u m n i M A G A Z I N E
The Wharton SchoolUniversity of Pennsylvania
MAKING IT IN SILICON [email protected]
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Labour at a Crossroads: Can Europe Rise to the Challenge of Global Markets?Munich, Germany, 25–26 June 19983rd Wharton European Forum
Innovation & Evolution:Asia’s Economic EmergenceTaipei, Taiwan, R.O.C. 11–13 June 19985th Asian Regional Alumni Meeting
1 5 — 1 7 m a y 1 9 9 8Wharton Alumni ReunionPhiladelphia, PA, 15–17 May 1998
• Executive Education Sessions• Alumni/faculty Exchanges• The Dean’s Wharton Town Meeting• Picnic on the Quad• Class Parties
For more information, please contact:Isabelle CegielRegional Director/Europe33.1.47.47.63.35 phone33.1.47.47.55.86 [email protected]
For more information, please contact:Injai W. Tai, Regional Director/Greater China886.2.23690011 ext. 110 phone886.2.23696780 [email protected]
Registration materials will bemailed shortly. For more informa-tion, please contact:Alumni Affairs Office1.215.898.8478 phone1.215.898.2695 [email protected]://www.wharton.upenn.edu
C O V E R A R T I C L E
Location, location, location. For entrepreneurs and venture capitalists alike, the Valley is an ideal place — some would say the only place — to launch a technology company.
Photograph by
Joseph Andris 7
EDITORRobbie W. Shell
STAFF WRITERSTom McMahonMike Baltes
EDITORIAL ASSISTANTJulia Feldman
DESIGNWarkulwiz Design Associates
EDITORIAL OFFICE
344 Vance Hall, 3733 Spruce St.
Phila, PA 19104 (215) 898-8478
Fax (215) 898-2695
URL address: http://www.wharton.upenn.edu/alum_mag/alum_mag.html
A l u m n i M A G A Z I N E
TDM
RVa
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Editorial Staff A
Winter 1998
F e a t u r e s
7 M A K I N G I T I N S I L I C O N VA L L E YSuccess in the High-tech Business Takes A) Vision; B) Great Ideas; C) Terrific Management; D) Attention to the customer; E) All of the Above
13 A L U M N I L E A D E R S H I P I N A S I AInterviews with 15 Executives Offer Personal Perspectives on One of the Most Volatile,and Versatile, Regions of the World
19 N E T W O R K N E W SHands-on Experience with a Flight Simulator Was Part of Professor Lori Rosenkopf’sResearch into How Networking Initiatives Affect the Creation of Innovation and Development of Technology
23 M A L L E A B L E C O R P O R A T I O N SAre Skills in Mergers, Alliances and Rapid Transformation Becoming the Most Crucial Competency for the 21st Century?
D e p a r t m e n t s
2 S C H O O L U P D A T EUndergraduate Aims for OlympicsJobs, Everyone? WG’97 Sets New RecordsExecutive Education Moves into China
7 I N T E R V I E W W I T H D E A N T H O M A S P. G E R R I T YTechnology: Changing the Fabric of Everything We Do
24 A L U M N I P R O F I L E SBernardo Vega, W’59: Promoting the Dominican RepublicBeth Starr, W’87: On the A-team in Asset-backed BondsRobert Bynum, W’80: Food, Fun and All That Jazz
26 R E S E A R C H W I R E
31 W H A R T O N A L U M N I C L U B SMaking a Global Impact
W H A R T O N A L U M N I M A G A Z I N E
1
HOMAS P. GERRITYean and Reliance Professor of anagement and Private Enterprise
OBERT E. MITTELSTAEDTice Dean, Executive Educationnd External Affairs
ARTI HARRINGTON, WG’76irector of Alumni Affairs
dministration Advisory Board
JOAN WALSH CASSEDY, WG’82PresidentKing Communications Group
JAY A. DUBOW, W’81PartnerWolf, Block, Schorr and Solis-Cohen
DAVID GRAFF, WG’84Senior Vice PresidentHearst Magazines International
ART HOWE, WEMBA’86PresidentMontgomery Newspapers
DAVID R. REIM, WG’90PresidentSimstar Digital Media, Inc.
ELLEN YIN, W’87, WG’93Health Care Consultant
S C H O O L U P D A T E
UNDERGRADUATE AIMS FOR OLYMPICS
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As the number one ranked fencer in the U.S. for men’s foil andthe number one fencer on Penn’s team, sophomore Cliff Bayer,W’00, would seem to have his hands full. But clearly you don’tget to the top of this sport by standing still.
Bayer traveled to fencing tournamentsin Montreal, Cuba and Venezuela duringthe past three months and will attend com-petitions in Italy and Portugal this spring.That’s on top of practicing his sport everyday on campus and every weekend at hishometown gym in New York City.
“It’s not the kind of sport where youhave a natural aptitude for it, like basket-ball,” says Bayer, who started fencing at age9. “You really have to work hard on tech-nical skills. It’s a lot of grunt work, a lot ofdrills … Some people call it chess with mus-cles. I don’t know how to play chess. ButI know that you have to go into a matchwith a game plan. It’s very tactical.”
Bayer fences with a foil, which is a thinner sword thanan epee or a saber. Fencers wear bulletproof kevlar materi-al and are hooked up electronically to a machine that lightsup when a fencer is hit. “Fencing is the second fastest sport
BAY
in the Olympics, behind shooting,” says Bayer. “Sometimestwo lights go off at the same time and it’s hard for a refereeto tell who got hit first.”
Bayer participated in the world cham-pionships in Cape Town in July where hefinished 40th, lower than he had hopedbut higher than any other American. InAugust he represented Wharton at theWorld University games in Sicily, where hefinished 15th. The U.S. team, which hecaptained, finished fifth — posting theirbest result so far and beating out teamsfrom such traditional strongholds asFrance, Hungary and Austria.
“Goals are very important,” says Bayer,who interned last summer at Merrill Lynch.“I like to set high goals for myself, becausethe higher you set them the higher yourresults will be. If you set low goals you arenot really going to push yourself.”
One of his goals is to participate in the Olympics in 2000in Sydney. But before that, “I would like to find a job thissummer in Milan and eventually major in internationalmanagement. I have to realize there is life after fencing.””
Julia Feldman
ER
A BANNER YEAR FOR JOB SEEKERS
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Perhaps it’s the MBA equivalent ofbreaking the sound barrier. Wharton’s1997 MBA class broke all previousrecords in number of jobs offered,number of jobs accepted and totalmedian compensation.
According to the Career Develop-ment & Placement Office, 98 percentof the class received job offers and 97percent accepted positions. Graduatesreceived a median compensationpackage of $130,000, includinga $75,000 starting base salary, a $20,000
signing bonus, a $2first-year bonus anneous compensatio
The three most were consulting, twith 30 percent of tby investment bawith 25 percent, antries, with 6 percen
McKinsey & Cograduates (49), follo
Sachs && Co. (
leyKeAning(2Ly
5,000 guaranteedd other miscella-n worth $10,000.popular industrieshe top employerhe class, followed
nking/brokerage,d high-tech indus-t and growing.. hired the mostwed by Goldman, Co. (28), Bain
24), Morgan Stan- & Co. (24), A.T.arney, Inc. (23),dersen Consult- Strategic Services
0), and Merrillnch (20).
In the last tsent 246 studand 131 intepositions. Iinterns joinedsion, BroderbWireless, CDPackard, MicInteractive, EOracle, PowerASony Music OInternet Partn
Job offersresponsibilitypercent of thetook positioncountries whjob offers, theing the U.S.) a
ILLU
hree years, Wharton hasents — 115 graduatesrns — into high-techn 1997, graduates or such firms as Activi-und Software, AT&TNow, Dell, Hewlett-rosoft, Intel, Disney
xcite, Intuit, Netscape,gent, Silicon Graphics,nline, Silicon Valley
ers and Sprint. with international were accepted by 43 class, while 21 percents abroad. Of the 31
ere graduates accepted most popular (exclud-re the United Kingdom,
Japan, South Korea, Hong Kong, Mex-ico, Singapore and Brazil. ”
S C H O O L U P D A T E
D
SCHOLARSHIP IN MOTHER TERESA’S NAME
BENEFITS INDIAN STUDENT — AND INDIA
When HOPE worldwide, an interna-tional philanthropic organizationbased in Wayne, Pa., presented itsHOPE Unity Award last summer toMother Teresa and her Calcutta-basedMissionaries of Charity, SambamurthyNatarajan, WG’99, had no idea thatthe award would relate in any way tohis experience at Wharton.
The HOPE Unity Award included atwo-year $50,000 scholarship for aWharton MBA student from India whohas demonstrated a commitment toreturning home and helping his or hercountry’s most disadvantaged citizens.Natarajan, after interviewing with officials from HOPE worldwide, wasawarded the scholarship in August.
The 31-year-old finance majorcomes from Bhopal where he, hisbrother and his mother, who has adoctorate in education, started a pri-vate school called Vidya Mandir(Temple of Knowledge). The schoolprovides an English education forapproximately 800 students in gradesK-8. “My family is not wealthy, but wehad a vision that we wanted to leave
a footprint in theNatarajan, whoofficer in the B“All the money tis ploughed back
Natarajan, whon the school’searned an enginNew Delhi andCitibank, first inin Mumbai, Chic
At Wharton, an interview wHOPE worldwidehis Wharton ednative country.
“I took great am not a social sbut a businessm“My intention is the next few yeworld. As a sucsional, I wouldstantial funds froships and well-ultimately set uporganization — sionals on a vol
UREI AND MCDONALDS
sands of time,” saysse father is a seniorhopal government.hat the school makes into improvements.”o continues to serve board of directors,eering degree near
eventually joined Singapore and thenago and New York. he was asked duringith the directors of
how he would use ucation to help his
care to explain that Icientist or sociologistan,” says Natarajan.to go back to India inars in the corporatecessful career profes- hope to raise sub-m corporate sponsor-off individuals and a non-governmentalto be run by profes-untary basis — that
would chaand ideas in
“I am peducation cation clasprofessionbasic literachildren. organized, municationstigmas. Tand there aThere cou
NATARAJAD
LOOKI
W H A R T O N A L U
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nnel experience, resourcesto activities for the poor. articularly interested in
and adoption. Adult edu-ses are needed to enable
al skill development, andcy classes are needed forAdoption today is poorlylacks marketing and com- and is full of barriers andhere are many homelessre many childless in India.ldn’t be a more perfect
N WITH WIFE VIDYA ANDAUGHTER RAGINI:NG TO INDIA’S FUTURE
Continued on page 28
KAPLAN
CELEBRATING ACHIEVEMENT: Beth Kaplan, W’80, WG’81,executive vice president, marketing, for Rite Aid Corp., received thisyear’s Kathleen McDonald Distinguished Alumna Award fromWharton Women in Business at the 18th Annual Wharton Womenin Business Conference on Oct. 31 in Philadelphia.
The award was renamed this year to honor Kathleen McDonald,WG’79, a lifetime advocate for women who was the original founderof what is now the Graduate Women in Business club. McDonaldwas killed in a car accident in June 1988 while on a business trip inLisbon, Portugal. At the time of her death she was manager of orga-nization and development for the performance division of ExxonEnterprises. In the spring of 1988 she had received the Exxon Pres-ident’s Award for Community Relations.
At left, Cathy DuRei, WWIB president, shows the plaque withthe names of award winners to McDonald’s father, AmbassadorJohn W. McDonald, and her stepmother, Christel McDonald. ”
M N I M A G A Z I N E
S C H O O L U P D A T E
ALUMNUS HONORED FOR DISTINGUISHED SERVICE
MURATSU
Keisuke Muratsu, WG’75, president ofActivity International, an advisoryand investment firm based in Tokyo,received the 1997 Distinguished Ser-vice Award during a presentation inOctober.
The DSA was established by theWharton Alumni Association in 1988to recognize exemplary volunteer con-tributions to the School.
Muratsu has been a member of theSchool’s Asian Executive Board sinceits formation in 1988 and presidentof the Wharton Club of Japan since1994. His volunteer activities have
includeand facwas onethe FacJapan, seven se
MuragraduatpositioaroundSaudi Asubsequtional, Ifamily-nesses b
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d fundraising, public relationsulty research. In addition, he of the original supporters of
ulty International Seminar inand has participated in allminars held so far.tsu joined Citibank after hision from Wharton, holdingns in a variety of locations the word, including Riyadh,rabia, and Athens, Greece. Heently formed Activity Interna-nc. and is also president of twoowned manufacturing busi-ased in the Kobe-Osaka area. ”
MANAGEMENT TRAINING
OFFERED TO
SENIOR EXECUTIVES IN CHINA
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Under a landmark agreement with the People’s Republic ofChina, Wharton and Penn’s Graduate School of Educationwill provide management training for senior governmentofficials and administrators in China.
The agreement was announced during PRC PresidentJiang Zemin’s visit to campus on Oct. 30.
The programs, developed at the request of the Chinese gov-ernment, will enhance management skills of public officialsand executives of state-owned enterprises who are working atthe national, regional and local levels in China, as well asexpose them to the principles of a market-driven economy.
“As the PRC continues to emerge as a significant force in the global economy, government administrators and executives will need to understand the dynamics of a com-petitive environment,” says Robert E. Mittelstaedt, Jr., vicedean and director of executive education at Wharton. “Weare delighted to be selected by the Chinese government tocreate this first-of-its-kind educational initiative.”
The three programs to be taught this year include: ■ The National School of Administration Senior Manage-ment Program — a two-week course targeting seniorgovernment officials and focusing on China’s transition toa competitive global economy. ■ The Jiangsu Management Development Program — anintensive six to eight week management development experi-ence at Wharton for provincial officials and senior executives.
■ The Shanghai Executive Development Program — target-ed to a broad market of managers and executives instate-owned enterprises and employees of multi-national cor-porations operating in China. Jiang Mian Heng, CEO ofShanghai Alliance Investment Ltd., will be Wharton’s part-ner in Shanghai.
Wharton has close to 500 alumni in Greater China, and107 students from this area are currently enrolled in MBA andundergraduate programs. ”
22nd Annual Wharton FolliesIn Philadelphia:
Thursday through Saturday
Feb. 12, 13, 14
At 6 and 8 p.m.
Mandel Theater,
Drexel University
For ticket information,
call Noel Parks at
215.985.1570
In New York:
Friday, Feb. 20, at 8 p.m.
Tribeca Performing Arts Center
199 Chambers Street
For ticket information, call
Banu Tansever at 215.546.8344
8
5
W H A R T O N A L U M N I M A G A Z I N E
S C H O O L U P D A T E
AMBANI
MOELIS
look.sser-olicyn topec- the
son,
ity
SEVENTH ANNUAL LATIN AMERICAN
CONFERENCEat the
Pennsylvania Convention Center
Philadelphia, PA
Friday, February 27, 1998
theme:
“Growth Through
Global Integration”
For further information
or to register,
Call 215-573-5598 or
Fax 215-573-3651
SPEAKING FROM EXPERIENCE
For many students, it was an opportunity for a behind-the-scenes at some of the most successful companies in today’s marketplace
Under the auspices of the Zweig Executive Lecture Series, the MuSchoemaker Lecture Series, the Lauder Institute, the Gruss Public PForum and other sponsors, top executives were invited to Whartomeet with undergraduate and MBA students and share their perstives on market trends, risk-taking, innovation, personal values andimportance of relationships, among other topics.
Speakers on campus last fall included:■ Rebecca Mark, CEO, Enron International■ Douglas A. “Sandy” Warner, Chairman, J.P. Morgan■ Anil Ambani, WG’82, Managing Director, Reliance Industries■ Ken Moelis, W’81, WG’81, Managing Director and CEO, Donald
Lufkin & Jenrette■ Shijuro Ogata, Senior Adviser, Yamaichi Securities■ Michael Dell, Chairman and CEO, Dell Computer Corp.■ Gilbert F. Casellas, Chairman, U.S. Equal Employment Opportun
Commission■ Lawrence Bossidy, Chairman and CEO, Allied Signal■ Clark Johnson, Chairman and CEO, Pier 1 Imports ”
CONSULTING BY THE BOOK
Two case scenarios:■ A European manufacturing compa-ny faces a declining return on net assetsand has asked you as a consultant tocome in and bail them out. Whatwould you do?■ A big consulting company hascome to campus looking for newrecruits and you desperately want toget hired in their Paris office (or anyother office). What would you do?
The answer to the second questionis easy: Get hold of a new book edit-ed by Will Auchincloss, WG’98, andTom Kibarian, WG’97, titled The 1997-98 Wharton MBA Consulting Club CaseInterview Study Guide.
For their material, the authors usedactual case studies — like the exampleabove about the European manufac-turing company — from second-yearstudents’ interviews with consultingcompanies. The interviews were writ-ten up by Auchincloss, members ofWharton’s management consulting
club, and a nuinvolved in the Cgram. Proceedon-campus versiohelp the Christm
“The book offpractice before thsays AuchinclosMercer Managemmer. “And the codon’t have a proas we don’t idenfrom which firmspearheaded laswho is now a con& Co. in Chicago
The book is a$15 from WetFeelishing companthat distributes iInternet.
What’s in it foWharton? “The and enhanced prcloss, “and the co
mber of studentshristmas in April pro-s from the originaln of the book went toas in April program.ers an opportunity to
e actual interview,”s, who worked forent over the sum-nsulting companies
blem with it as longtify which case came.” The project wast year by Kibarian,sultant for McKinsey.vailable at a cost oft Press, a small pub-y in San Franciscots products over the
r the authors and forSchool gets royaltiesestige,” says Auchin-nsulting club, which
helped comoney Besides ththink it w
FROM LE
JOE
mpile the cases, gets a littleto help cover expenses.at, we had fun doing it. Weill be a popular book.” ”
FT: MANAGEMENT CLUB MEMBERS
SCALISE, GWYNN HAMPTON, AUCHINCLOSS, AND
(SEATED) VIT VASISTA
S C H O O L U P D A T E
■ Fifteen Wharton faculty will participate in a weekly series on“Mastering Marketing” to appear inthe Financial Times starting thisspring. Other schools contributingarticles to the series include Kel-logg, INSEAD and the LondonSchool of Business.■ Tom Siebel, CEO of Siebel Sys-tems, Inc. in San Mateo, Ca. ,keynoted the 29th annual Semi-nar for Business Writers held Dec.14-18 in Philadelphia. Siebel Sys-tems is the world’s leading providerof enterprise-class sales, marketingand customer service systems.
The 45 participants in the Decem-ber seminar included journalists from
the New York ington Post, CWeek, U.S. NComputerworldsa, among oth■ ”RenaissanTools for a Neof the 24thYoung, Jr. Mheld Jan. 15delphia ConvconferenceWharton’s AfAssociation.
Keynote speGreen, managBrothers, andtle Rock Nin
NEWSCampus
Times, Fortune, Wash-NN, Money, Businessews & World Report,, Reuters and La Pren-er organizations.ce: Delivering the
w Era” was the theme annual Whitney M.emorial Conference-18 at the Phila-
ention Center. The was sponsored byrican American MBA
akers included Ernesting director, Lehman member of the “Lit-e;” Harriet Michel,
presideSupplieThe Hpreside■ Impafor this“ManagCreatinsponsoSystem9-10;ResouPens ioApril 2Issuessponsofor BuMay 2
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nt of the National Minorityr Development Council, andon. Festus Mogae, actingnt of Botswana.ct conferences scheduled spring on campus include:ing Clinical Performances:g Competitive Advantage,”red by the Health Care s Department on March
“Retirement Needs andrces,” sponsored by the n Research Counci l on 7 and 28; and “Ethical
in Financia l Services ,” red by the Zicklin Center siness Ethics Research on9. ”
Wharton Technology ClubPresents
Viable Strategies for the Internet and Wireless Markets
2nd Annual Wharton Technology Conference
Pennsylvania Convention Center, Philadelphia, PA
February 20, 1998
visit http://dolphin.upenn.edu/~techclubemail: [email protected]
Sprint, Trilogy, Lucent Technologies, Softline Inc., Chase Manhattan Corp., UBS Securities
Wharton IndiaE C O N O M I C F O R U M
Presents its Annual Conference
“India at the Crossroads”DIRECTIONS OF CHANGE
March 20, 1998Wyndham Franklin Plaza Hotel17th and Race StreetsPhiladelphia, Pennsylvania
For further information contact:Wharton-India Economic ForumUniversity of PennsylvaniaTel: (215) 898-7631, Fax: (215) 573-8999web site: http://dolphin.upenn.edu/~whindia
Sponsored by Wharton Emerging Economies Program
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SUCCESS IN THE HIGH-TECH BUSINESS TAKES A) VISION B) GREAT IDEAS C) TERRIFIC MANAGEMENT D) ATTENTION TO THE CUSTOMER E) ALL OF THE ABOVE. ANSWER(S) BELOW
MAKING IT IN >
WANTED: Entrepreneur with a solid idea for a product that willmeet the needs of the technology marketplace. Must have man-agement acumen and a working knowledge of computerchips, software, biotechnology, electronics or other fieldsthat average people find hopelessly arcane. Must bedriven to succeed (mere self-starters need not apply).Must be ready to put in long hours and be unafraid ofrisks. Can work anywhere, but willingness to relocate to Cal-ifornia’s Silicon Valley a plus. Ultimate financial payoffcommensurate with vision, determination and hard work.
You won’t find this job description in the classified sectionof your local paper. Somebody interested in starting a tech-nology company, or joining a start-up, doesn’t scan thewant-ads. But based on interviews with Wharton alumninow working in Silicon Valley — known by its inhabitantsas, simply, the Valley — this is an apt short-hand descrip-tion of a high-tech entrepreneur.
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W H A R T O N A L U
With this job profile inmind, what really is involved in starting atechnology company? Is it easier to launch a firmthese days than it was 10 or 15 years ago? Are low barriers toentry offset by the need to have not just a good idea, but a ter-rific idea that adds value to existing functions? What does ittake to succeed?
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From 1969 to 1989, Wharton DeanThomas P. Gerrity was chairman and CEOof Index Group, one of the world’s lead-ing consulting firms in the strategic
management ofinformation tech-nology.
In the yearssince then, saysGerrity, who was
appointement issadvancemuch bethe technapplicati
At Whapplicatio* New enablingly populbroadcas* WharSoftware
Interview with Wharton Dean Thomas P. Gerrity
Technology: Changing the Fabric of Everything We Do
d dean in 1990, “the manage-ues created by technologicalments haven’t changed thatcause the real power is not inology per se, but in its use and
on by people.”arton, says Gerrity, these uses andns are everywhere. For example:
digital video capabilities are Professor Jeremy Siegel’s wild-ar market commentary to bet to various locations on campus. ton’s SPIKE Communications provides a single, customizable
interfonline* A Whartharneulty aand renies, ion 7,0macroStanfoalread* Thwhich
7
M N I M A G
ace to the School’s rich array of student services.
new web-based interface calledon Research Data System (WRDS)sses large data sets for use by fac-nd students, including stock pricesturns for more than 6,500 compa-nformation from Standard & Poor’s00 publicly held companies, andeconomic data going back to 1946.rd and USC business schools havey adopted the system.e Wharton Technology Club — last fall drew 200 students to its
A Z I N E
F E A T U R E
To find out, we interviewed alum-ni with different perspectives —entrepreneurs who have beeninvolved in starting companiesfrom scratch, venture capitalistswho finance fledgling firms, andexecutives at established technolo-gy companies. Some people we
talked to have worn differenthats, like the alumnus
who played a keyrole in getting afirm off the ground
and now helps manage a technolo-gy mutual fund.
In recent years, technology start-ups have blossomed like so many
wildflowers in a mountain meadow. Once obscure compa-nies such as Microsoft Corp. and Intel Corp. are nowhousehold names. The Internet, originally the province ofthe military and academics, is now a research, retailing andcommunications tool for the masses. Who would havethought as recently as a few years ago that your next-doorneighbor would be able to create his or her own “site” onsomething called the “web”?
Shaking the Money TreeOne thing is for certain: the tech boom has not gone unno-ticed by investors.
Each quarter, Coopers & Lybrand L.L.P. conducts a surveycalled the Money Tree that tracks venture-capital invest-ments. For the third quarter of 1997, the 600 VC firms thatwere surveyed invested $3 billion in 646 U.S.-based compa-nies. This brought total venture investments for the firstnine months of 1997 to $8.6 billion in 1,916 financings.Coopers & Lybrand predicted that, by the end of 1997, ven-
Joe Durrett
W I N T E R
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ture investments would total $12 billion for the year, near-ly $2 billion more than in 1996.
Software and communications companies received morefinancing, 22 percent, than any other industry segment dur-ing the third quarter of 1997. Internet-related companiesreceived 18 percent. Among states, California received farmore venture money than any other state — 41 percent.Massachusetts, a distant second, received 7 percent.
With all this cash available, you might think it’s easier tostart a technology company today than in the 1980s. Butthat would be only partially true.
“There’s certainly more capital around, so in that sense it’smuch easier,” says Ruthann Quindlen, WG’83, general part-ner at Institutional Venture Partners, a Menlo Park, Calif.,firm that manages $735 million in venture capital and investsin early-stage companies in information and life sciences.
“However, the sophistication about investing in start-upshas grown tremendously in that time period,” Quindlensays. “So the requirements for a very large market opportu-nity, a good management team and technical expertise haveescalated. In that sense it’s harder.”
“What’s more difficult is not so much coming up with anew idea but sustaining the growth of a business and gen-erating profitability,” says William L. Larson, W’77, CEO ofMcAfee Associates Inc., a Santa Clara, Calif., firm that makescomputer-security and management-software products. “Forexample, many Internet start-ups have been successfullyfunded and gone public, but few of them have earningspotential. They’re ‘concept stocks’ trading at high prices.I’m a big believer in stocks that generate earnings.”
Joe Durrett, WG’69, chief executive officer of BroderbundSoftware Inc., a Novato, Calif., maker of the popular gamesMyst and its sequel, Riven, notes that barriers to entry arerelatively low, at least for software companies.
“First, people are very willing to finance you because theybelieve there’s a tremendous prospect of success,” says Dur-rett, an experienced consumer brands and direct-marketing
first meeting — is sponsoring a speakerseries throughout the year, a career fairon the West coast this month and a con-ference on campus in February. Fiveyears ago, the club didn’t exist.* Faculty approved a cross-functionalMBA major this fall to educate tech-nological entrepreneurs and futureleaders of technology-based companies.Courses range from “Innovation, Changeand Entrepreneurial Management” and“Technology for Managers” to “Tele-communications Technology andCompetitive Strategy.”
* A Whardirector arentirely bythat identifirms in em* The CarOffice repyears 246 positions,* At last nomic Forfinance mparticipanNew Delhi
ton professor and researche co-editing a book — written members of the faculty —fies competitive strategies forerging technologies.
eer Development & Placementorts that over the past threeMBA students took high-tech the majority in Silicon Valley.spring’s Wharton-India Eco-um in Philadelphia, India’sinister addressed conferencets by live video feed from
.
The“has everyt
New OIf youmatiois onecreatiinternthem explotionsorgan
1 9 9 8
use of technology, says Gerrity,changed the fabric of virtuallyhing we do at Wharton.”
pportunities for Individuals look at the global village, “infor-n and communications technology of the driving forces behind itson,” Gerrity notes. “If you look atal productivity increases, many ofare coming from the ability toit information and communica- technologies throughout theization … And if you look at the
F E A T U R E
executive who worked for Kraft General Foods and Procter& Gamble Co. before joining Broderbund in 1996. “Sec-ondly, you don’t need major plant and equipment. Theprincipal investment is intellectual capital, and the role ofsweat equity is tremendous.”
Tales of Three EntrepreneursCarolyn A. Rogers, WG’86, graduated from the University ofColorado at Boulder with a bachelor’s in electrical engineer-ing and worked at IBM Corp. as a design engineer. Later, shereceived an MBA from Wharton and joined Hambrecht &Quist Inc.
After more than six years as a senior technology analystat Hambrecht & Quist, Rogers decided she “didn’t want tobe a securities analyst for life … So I looked around for PlanB.” She was specifically interested in a start-up. What shefound was “10 guys in San Jose, Calif., who didn’t have ven-ture capital or business experience.”
In the spring of 1992, those 10 engineers had started acompany called PicoPower Technology Inc., which madepower-management semiconductor chips for portable com-puters. While Rogers was still at Hambrecht & Quist, sheconvinced the engineers that they needed her to write theirbusiness plan, a project that took six months. Rogers thenjoined PicoPower as vice president of finance and chieffinancial officer in the company’s 3,000 square feet ofcramped space.
Rogers helped raise $5 million in venture money. Shehired a controller and people to manage inventory. She filedpatents and designed the company’s logo. She wrote pressreleases and coordinated trade shows. She helped the com-pany grow from zero revenue to $50 million in three years.And she was a key negotiator in selling PicoPower to CirrusLogic Inc.
“They didn’t hire me; I hired me,” Rogers recalls with achuckle. “This group didn’t have fabulous contacts and I did-
W H A R T O N A L U M
9
n’t have a track record of running a company. But since theywere disenfranchised, they let me do what I could do. Thatwas a big opportunity … A lot of companies try to keepthings constrained. We were so strapped, I stood up and atelunch in the hall.” She worked 14-hour days, “harder thanI have ever worked in my life.
“I certainly was a risk-taker,” she adds, “but I didn’t jumpinto that without knowing exactly what I was getting into.I thought the product was very good. I made sure I was tak-ing the right risk.”
After PicoPower was sold, Rogers stayed with the firm tohelp oversee its integration with Cirrus Logic. She decidedin 1995 to quit and take a year off, during which time shewrote a business plan for one entrepreneur, raised venturecapital in Asia for another, and spent time with her twoyoung children, born 17 months apart. In 1996, she returnedto work full-time, opening an office in Palo Alto, Calif., forJ.& W. Seligman & Co., a New York-based mutual fund com-pany. Today, as vice president and investment officer, she ison a team that manages a $4.5 billion high-tech fund.
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Dwight K. Morita, WG’77,likes to quip that his entre-preneurial bent is genetic. Hisfather owned a plumbing-supplybusiness in Hawaii. Morita’sgrandfather, who had been bornin Japan, picked up extra cash bydistilling bootleg rum in theHawaiian cane fields.
In 1986, Morita, who was thenat General Electric Co., was oneof seven people who started Syn-opsis Inc. in Research TrianglePark, N.C. Six engineers at GE’s Microelectronics
Carolyn A. Rogers
creation of new industries and the col-lapse of old ones, much of that is drivenby technology. In the financial servicesindustry alone, the cost of consumer-oriented financial services is clearlyplummeting with the rise of the Inter-net. It’s at the inception, but thetrajectory is clear. Middlemen will beeliminated as new opportunities are cre-ated for individuals.”
Given the almost limitless possibili-ties suggested by new uses andapplications, Gerrity asks, how does amanager weave technology into the fab-
ric oand etechn
Soin thtechnulty Gerri
Cuexamnolobanktechnmuni
f an organization, both internallyxternally, in ways that exploit theology’s ability to create value?me of those answers can be founde new approaches to managingology that are a focal point of fac-
research throughout the School,ty says.rrent research topics include, forple: the role of information tech-
gy on productivity in the U.S. retailing system; the nature of ological change on wireless com-cation; global technology and its
impstaforinfoageeletheandmenes
andalrein m
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act on national markets and nationtes; electronic commerce; the need consumer protection in the globalrmation infrastructure; the man-ment of technological change; howctronic commerce will influence relationship between suppliers retailers; and electronic com-
rce’s effect on business-to-busi-s marketing. Technology, especially information communications technology, “hasady become an everyday tool with-any organizations, including ours,”
A Z I N E
F E A T U R EWilliam L. Larson
D
Center received the company’s blessing and a loan to com-mercialize “logic synthesis” technology — software thatcould be used by companies to design and manufacture inte-grated circuits. The engineers had developed the technologyat GE after the company stopped funding the research.
Morita, who had joined GE in North Carolina after stintsat Intel and National Semiconductor Corp. in California, wasapproached by Aart de Geus, head of the engineering team.De Geus asked Morita to develop a business and financingplan for the new company, which was then known as Opti-mal Solutions Inc. Morita’s first role was as chief financialofficer. He then became vice president of corporate devel-opment, focusing on strategy and mergers and acquisitions.
The company, which began with seed money and nineemployees, had $22 million in revenues and 138 employeesby 1990. Along the way, Synopsis continued to grow, partlyby acquiring or merging with other firms. For its 1997 fiscalyear — 10 years after it moved from North Carolina to Moun-tain View, Calif., its present home — Synopsis had revenuesof $500 million and more than 2,100 employees. Today, it isa leader in providing products and services for designingcomplex electronic systems and integrated circuits.
“You’re always on edge,” ishow Morita recalls his earlydays with the start-up. “Yoursuccess is never assured. It was
only just before going public thatwe realized we had a sustainablebusiness model. It’s easy to hit oneproduct but to develop a sustain-able franchise is a real measure ofsuccess.”
Morita says it took three to fouryears for him and his colleagues to
begin to feel comfortable.Nonetheless, the experience
was “the ultimate
wight K. Morita
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excitement, because when youstart a company it’s like you’reworking to change the world.For many entrepreneurs, that’sthe driver. The driver is notmaking a lot of money. The dri-ver is wanting to change theworld.” After a moment’s reflec-tion, he laughs and says,“Of course, I’m not goingto turn the money downeither.”
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Brandon Watson, W’96, WG’97, and four classmates in amanagement course taught by Ian C. MacMillan, George W.Taylor Professor of Entrepreneurial Studies, started a firmcalled 5 Spot during their senior year. The students devel-oped network-load-balancing software, a product that allowscomputer users to continue working without disruption ifother parts of a network go down.
“I wrote the initial memo and pitched it to my buddies,”recalls Watson, 23, who graduated from Wharton’s JeromeFisher Program in Management & Technology and sub-matriculated into the MBA program. “Most of us hadtechnical background. This was fairly easy for us to grasp.”
It was never the partners’ intention to build a long-last-ing company with 5 Spot. Since they had accepted jobs atother companies, the 5 Spotters decided to develop the prod-uct and then try to sell it to an established software company.
The business was built solely by sweat equity. “To date,we’ve put no dollars into this, which is phenomenal,” saysWatson. “That was one of the lessons we learned fromMacMillan: when you can spend no money, do so.” Thebankers and lawyers advising 5 Spot are friends. Says Wat-son: “If we sell [the business], they take a certain percentageand a fee.”
Gerrity says. “Technological expertisepervades the Operations and Informa-tion Management (OPIM) department,for example, but it’s also in finance,marketing, public policy and so forth.We are integrating the application andexploitation of technology into the waywe teach different disciplines.
“Whether a student thinks aboutmarketing as an area of study or as aspecialization, he or she will learn aboutthe use of technology in that field. Elec-tronic commerce alone is a whole newchannel for building images, represent-
ing proing saworksimpachere.”
InformFrom tfree flfor msays Gket mpeopleresour
ducts, linking to customers, clos-les, managing transactions — the. Technology clearly has a huget on what we research and teach
ation Explosionhe economist’s point of view, theow of ideas and knowledge “makesore and more perfect markets,”errity. “The more efficiently mar-echanisms work, the smarter are about effectively allocatingces.
“Bmaticompmorereseaing foto a cing” f
Coinformeasilyily avgettinit int
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ut the availability of so much infor-on can have major ef fects onanies. It makes the world much transparent in such areas as marketrch and recruiting. If you are look-r top talent, it is all too easy to go
ompany’s web page and begin hunt-or who is responsible for what. mpetitors, of course, can accessation about your company just as
. “So if the information is all read-ailable, then the premium is not ong the information but on turning
o knowledge that you have com-
F E A T U R E
The Wild West View of Entrepreneurship
Ambition and talent are clearly pivotal in making a start-upa success. But is success largely the result of one person’svision or of having a well-tuned management team in place?
“People have this view of entrepreneurs as the great indi-vidualists, the Wild West view of entrepreneurship. That’sthe wrong way to think about it,” says Gordon Hull, WG’89,a former colleague of Morita’s at Synopsis and now a gener-al partner with CMEA Ventures, a venture-capital firm in SanFrancisco.
“A better way is that when you have complex systems,you’re interdependent with others to bring certain skill setsor experiences to bear,” Hull says. “You can have an indi-vidual initiate a company, but really it’s a group of verytalented and interdependent people coming together tobuild the company and create products and value. . . Typi-cally, the one factor that correlates most highly with successis a management team that has done it before in a similarindustry.”
A slightly different view is espoused by Ken Schroeder,WG’69, president and chief operating officer of KLA-TencorCorp. in San Jose, Calif., a world leader of chip-inspectingtools that help semiconductor companies detect and elimi-nate problems in the manufacturing process.
“The common element in success is one person who isthe visionary for the business,” Schroeder says. “I’ve seencompanies with good and bad management teams, and theycan both be successful. I’ve seen companies with everythinggoing for them that fail. I’ve seen companies undercapital-ized. But if a company has one guy or woman who reallyunderstands the market, and sees a problem and is able tochoose the winning technical solution from a cost-perfor-mance point of view, that’s usually the key.”
Broderbund’s Durrett believes some technology start-ups
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hurt their chances for success because they don’t focusenough attention on customers.
“Increasingly, the most important element [in success] isnot technology, it’s knowledge of the consumer. This is oftrepeated but not oft followed,” Durrett says. “If you think,‘If we make it, they will use it,’ you’re in deep trouble. Butif you’re in a situation where ‘They need it and we can makeit,’ you’re going to win.”
John Dean, WG’74,president and chief execu-tive officer of Silicon ValleyBancshares, a Santa Clara, Calif.,firm that provides financing toemerging growth technology andlife sciences companies, sums upthe key to success this way: “Peo-ple, people, people. You have tohave a good product. There has tobe an eventual market need. Butgreat ideas and great products failbecause of people.
“What you would hearin the Valley, from ven-ture capitalists andothers, is that man-agement of people is soimportant,” adds Dean. “It hap-pens every day: Venture capitalists will come in [to afledgling firm] and say, ‘The concepts are there, but youneed new management to succeed.’”
Identifying a Growth MarketMcAfee’s Larson offers this perspective on what it takes tolaunch and build a company: “It’s easier to surf a wave thanthread a needle. If you pick a high-growth market, you canmake mistakes and do well. Identifying trends is the most
Ruthann Quindlen
mand over and that you manage effec-tively.”
Although the business community isjust beginning to “understand high per-formance learning organizations —those with an open values-based cul-ture that encourages innovation —Whar ton itself has already madeprogress adapting to this increasinglytechnological age,” says Gerrity.
For example, prospective studentscan apply on-line to the school’s MBAand WEMBA programs and verify on-line the status of their applications
throdensystJavacourty; rthe SlongPlaceon-ljob creacomtion
ugh the admissions process; stu-ts on campus use an auctionem, developed on a web-basedScript application, for selectingses according to individual priori-ecent graduates are connecting tochool and each other through life- email; the Career Development &ment Office offers all its resources
ine, including an alumni database,positions and details on how to te a resume. Links are available topany home pages and job informa- sites.
woenhsecmuconGerwodevandSch
thenew
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As for the 69,000 Wharton alumnirldwide, “we are in the middle ofancing our virtual community — a
ure and searchable web-based com-nication system that will offer bothtact and calendar information,” saysrity. “There will be increased net-rking oppor tunities for careerelopment and community building, new ways to reconnect with theool.“Technology no longer belongs to specialist,” he says. “It’s a brave world for everyone.” ”
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critical thing. Behind that, you want to have a businessmodel that generates cash, because cash is king when you’reyoung. You don’t want to rely on external financing. Thethird factor is culture. You have to set a direction and haveleadership and layer in processes to allow people to achievetheir potential. True leaders empower ordinary people to doextraordinary things.”
Quindlen of Institutional Venture Partners, who person-ally investigates thousands of possible investments a year butactually puts money into only two or three companies, con-firms Larson’s view. She says her company looks at severalfactors before deciding to funnel money to a start-up.
“The first thing we look for is a huge market,” saysQuindlen, whose firm has a Website that invites entrepreneurs tosubmit proposals. “If you have alarge market, you can still performless spectacularly and still have anopportunity [to succeed]. That’sfirst and foremost. The secondthing is to have great people. Idon’t mean super-seasoned people,but visionary, market-oriented
people who can lead. If youhave those ingredients, your
chances for successincrease tenfold.”
Several alumniagreed that the suc-
cess of so many technology firmshas led to a problem — a shortageof qualified people to fill positionsneeded to help companies in the
Valley grow. Notes Hull of CMEA Ventures: “These busi-nesses are growing so quickly they’re outstripping the laborforce.”
Still, the alumni say the Valley remains a superb place –if certainly not the only place — to launch a company. Forone thing, there is an infrastructure of experienced venturecapitalists and related legal and financial experts. In addition,the Valley is home to some valuable intangibles that may bescarcer in the more buttoned-down East.
“There’s an attitude about entrepreneurs being at thetop of society’s food chain here,” says Hull. “There’s thatframe of reference that says to talented young people thata good thing to do is become an entrepreneur as opposedto a doctor or an investment banker — or a venture capi-talist, for that matter.”
No one, of course, likes to bungle a start-up. But Hullnotes that Valley entrepreneurs are risk-takers, and the pre-vailing Valley attitude is that you can accept and learn fromfailure. Hull says one entrepreneur he has worked with “hashad six great successes and one huge failure. But that failuredidn’t stop him from starting another business.”
Ken Schroeder
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Hot Areas and Good Advice
Alumni offered opinions on a few areas of technology thatshow the most promise going forward.
Computer networking is “huge” because there’s “such anopportunity to become acquired within a 12- to 18-monthwindow,” Quindlen says. “We are heavily invested there.”Quindlen also likes firms specializing in electronic com-merce and security.
“Software for networks has been a great area,” saysSchroeder of KLA-Tencor. “Computing has been gettingcheaper and cheaper and that trend will continue.”
Internet-related companies “will have a significant impacton the way we do business in the United States at the con-sumer level,” says Dean of Silicon Valley Bancshares. “I can’ttell you how it will end up but there’s a richness of creativ-ity there.”
As for advice to would-be technology entrepreneurs, “talkto customers,” says Quindlen. “It’s much better to come to[a venture capital firm] with some kind of picture from cus-tomers on how they would use the idea you’re thinking ofcreating. The second thing is be bold. These rewards do notgo to the meek.”
“Spend a lot of time trying to network and getting toknow people of like mind who want to start a company,”Schroeder says. “Keep an eye out for that visionary or try tobecome one yourself.” In addition, “Hang onto the equityof the company … I think a lot of companies end up giv-ing too much away, whether to venture capitalists orsomeone else.”
Synopsis’ Morita says the most important skill missing inthe Valley is marketing. “I’m talking strategic marketing, strate-gic thinking,” he says. “There’s no lack of technology. Thebiggest difference I see in making a successful company is hav-ing the right technology and the right marketing outlook.”
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What’s up these days with Watson, Rogers and Morita?Watson is trying to sell his start-up and working full-time
for Microsoft as product manager for digital television.“We’re changing the future of television,” he offers. “I’m try-ing to figure out what TV of the future is going to look like,how we’re going to bring it to the masses, how the TV andcomputer will interact, and how these new forms of com-munication and entertainment might take shape.”
Rogers says she’s thrilled to be with J. & W. Seligman, butdoesn’t rule out the possibility of someday getting involvedin another start-up. “In a heartbeat I’d do it again,” she says.“It was such a good decision [to join PicoPower]. It wasn’t
Continued on page 28
This story was written by Stephen J. Morgan, a Philadelphia area freelance journalist and former director of media relations at Wharton.
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Wharton’s Alumni Leadership In Asia
Despite economic woes that have beset parts of Asia over thepast few months, the region still offers the promise of rapid-ly expanding markets and new global alliances.
The 2,400 Wharton alumni working in Hong Kong, India,Indonesia, Japan, Korea, Malaysia, New Zealand, the People’sRepublic of China, the Philippines, Singapore, Taiwan, Thai-land, Vietnam and Australia are part of Asia’s future. Manyare in positions of leadership at a time when executive abil-ity is being tested like never before by volatile currencies,
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regional recessions, new competition, deregulation and pri-vatization, to mention a few of the more prominent trends.
In the following pages we asked 15 alumni to identify themajor challenges facing their companies over the next five years, the attributes they think characterize effective leadership, notable regional business trends and favoriterestaurants and hotels.
Through these individual interviews we offer a glimpseof Wharton’s alumni leadership in Asia.
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Laurence Za Yu Moh, WG’53
Job Title: Chairman, Plantation Timber Products, Singapore
Principal Responsibility: Creating the vision for the com-pany, overseeing the development of corporate strategy andproviding guidance and mentoring to top management
Line of Business: PTP is China’s largest integrated woodproducts company, with all pro-
duction oriented to China’s largedomestic market
Major Challenge Over the NextFive Years: Establishing a nation-al marketing and distribution sys-tem which will effectively enable usto achieve both the market shareand the premium position that oursuperior quality deserves
Attributes of Effective Leader-ship: Ability to evaluate people;willingness to delegate; insights into
evaluating risks
Most Notable Regional Business Trend: The emer-gence and evolution of China as a huge market economy.This development is immense, incredibly rapid and willhave far-reaching effects. The key requirement for effectivedevelopment is managers … It is particularly exciting for meto participate in this phenomenon as I spent the first 22 yearsof my life in China …
Favorite Restaurants in Singapore: Lei Garden (Chinese) and Les Amis (French)
Favorite Hotel in Singapore: Ritz Carlton
Tony Perkins, WG’88
Job Title: Principal, McKinsey & Co., Beijing
Principal Responsibility: Building McKinsey’s practice inChina to provide top management of leading Chinese state-owned enterprises (SOEs) and major multinationalcorporations (MNCs) with strategic, operational and organ-izational counsel
Line of Business: Management consulting
Major Challenge Over the Next Five Years: Retainingsufficient talent in China’s dynamic and competitive econ-omy to fully meet burgeoning client demand. Due to theCultural Revolution, large MNCs have a difficult time find-ing middle managers for strategic planning, finance,
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marketing and general management positions. McKinsey’searly-tenure Chinese associates are an attractive source oftalent that is much less expensive than expats
Attributes of Effective Leadership: First is focus. Sec-ond is inspiration. Emerging from 30+ years in a communistsystem, middle managers in Chinese SOEs are reluctant toassume accountability. As a result, organizational changecomes slowly. Leaders are able to inspire initiative-takingthroughout an organization. Third, values. The PRC econ-omy and Chinese SOEs are plagued with corruption from theblatant to the borderline, and many managers look the otherway. But leaders communicate standards and then exem-plify corporate and personal values in every interaction
Most Notable Regional Business Trend: The mostnotable trend in Asia not yet widely recognized is the emerg-ing internationalization of China’s leading enterprises, suchas CITIC, COSCO, Baoshan Steel and Haier. Over the next5-25 years, such companies aspire to be on the global For-tune 500 — a “third wave” of Asian-based MNCs behindJapan (such as Sony and Matsushita) and Korea (Samsungand LG)
Favorite Restaurant in Beijing: Lulu’s
Favorite Hotels in Beijing: Palace Hotel, ChinaWorld
Jwa-Jeen Choi, WG’80
Job Title: President & CEO, Suttong Corp., Seoul
Principal Responsibility: To successfully reinvent a 43-year-old manufacturing company into a growth company inthe information age
Line of Business: Batteries, plasticsand pressure-sensitive adhesiveproducts, household and consumerhealthcare products, medical sys-tems
Major Challenge Over the NextFive Years: To keep a leadershipposition in our niche business cate-gories through technology-baseddifferentiation and lowest-coststructure
Attributes of Effective Leader-ship: Flexibility and adaptability tochanges in environments, technolo-gies, competitive structures and consumer behaviors
Most Notable Regional Business Trends: Global competition from global players who are armed with sophis-
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ticated management skills, well-recognized brands andstrong financial muscles; financial instabilities and weakfinancial institutions throughout the region; westernizedconsumer behavior and rising spending in luxury goods
Favorite Restaurant in Seoul: Palsun (Chinese)
Favorite Hotel in Seoul: Grand Hyatt
Chester Koo, WG’79
Job Title: President, China Life Insurance Co.; Chairman,Cycloria Inc.; Chairman, Videoland Inc., Taipei
Principal Responsibility: To manage Koos Group China LifeInsurance Co. and to supervise the group’s telecommunications business (multiple cable systemoperation, satellite uplink, cable system construction, cable TV net-works, cable TV ad sales)
Line of Business: Life insurance,advertising, public relations, directmail sales, satellite and cable TV,telecommunications
Major Challenge Over the NextFive Years: Continuing liberalization
and internationalization of Taiwan’s economy, which leadsto fiercer competition from overseas
Attributes of Effective Leadership: Modesty, which onthe part of the leader can lead to harmony and unity with-in the company; honesty, which builds credibility amongclients; foresight, which allows a leader to either take the ini-tiative or take protective measures in advance
Most Notable Regional Business Trends: Deregulationand privatization
Favorite Restaurant in Taipei: At the Ambassador Hotel
Favorite Hotel in Taipei: Grand Hotel
Mirzan Mahathir, WG’87
Job Title: Group Executive Chairman, Konsortium Perka-palan Bhd., Kuala Lumpur
Principal Responsibility: To provide leadership to thegroup by formulating a realistic vision, developing short andlong-term objectives, building and motivating an effectiveteam that can implement policies that will result in thegroup achieving our objectives
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Line of Business: Multi-modal logistics service provider.We are focusing on providing the expertise and resources todesign and implement effective inventory management sys-tems for companies. This involvesusing the company’s and our owntransportation and storage assets tosmooth the flow of in-bound andout-bound inventory. We operatein ASEAN, South Asia and SouthAfrica and are looking to cover theentire Asia-Pacific region as well asthe Indian Ocean rim countries
Major Challenge Over the NextFive Years: To position the groupto compete effectively as marketsderegulate, infrastructure improves,new competition emerges and tech-nology develops
Attributes of Effective Leadership: Listen well, act deci-sively, behave ethically always
Most Notable Regional Business Trend: As companiesconcentrate on developing their skills and expertise in prod-uct development, the manufacturing process and marketing,they look to outsource certain functions to specialist orga-nizations. They stand to gain through better and morecost-effective service and better utilization of resources. Dis-tribution is one such area. In Asia, the cost of distributionis high. Companies that can lower the cost of distribution,or better still, work on reducing their client’s cost of inven-tory, are best placed to benefit from this trend.
Favorite Restaurant in Kuala Lumpur: Mango Tree
Favorite Hotel in Kuala Lumpur: Equatorial Hotel
Gu Dunqing, AMP’91
Job Title: Director of the Board, Executive President, Shang-hai International Trust & Investment Corp., Shanghai
Principal Responsibility: In charge of investment bank-ing division, fund investment division, and internationaltrading and consulting division
Line of Business: The company is a financial institutionbut covers other industries as well, including real estate,international trading and investing
Major Challenge Over the Next Five Years: As the TrustLaw is promulgated in the near future, the company has toadjust to the trust and investment banking business
Attributes of Effective Leadership: Creativeness; per-suasiveness; perseverance
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Most Notable Regional Business Trend: The stock andM&A markets will develop more rapidly because of the refor-mation of state-owned-enterprises
Favorite Restaurants in Shanghai: Gap (Jin-Ting) forChinese; Jax for Western cuisine
Favorite Hotels in Shanghai: Sheraton-Hua Ting andHoliday Inn
Kongkiat Opaswongkarn, WG’80
Job Title: Founder, President and CEO, Asset Plus Securi-ties Co., Ltd., Bangkok
Principal Responsibility: In charge of overall operationsof the firm, with an emphasis on marketing
Line of Business: Investment banking — domestic andcrossborder, M&As, restructuring, new listing sponsorship,fundraising, general advisory; stockbroking and research;investments, both direct and portfolio investment
Major Challenge Over the Next Five Years: Maintain-ing efficiency of operations and the
entrepreneurial spirit of the compa-ny as the business grows. These are key factors that will help us compete successfully against largeinternational investment banks andsecurities houses
Attributes of Effective Lead-ership: Vision and the ability to transfer that vision to others;human resource management; risk taking
Most Notable Regional Busi-ness Trends: Further consolidation
within the region and more crossborder deals among Asiancompanies
Favorite Restaurant in Bangkok: The Golden Lotus
Favorite Hotel in Bangkok: Regent
Philip D. Murphy, WG’83
Job Title: President and Managing Director of GoldmanSachs (Asia) L.L.C., Hong Kong
Principal Responsibility: Overseeing Goldman Sachs’activities in Asia, outside of Japan
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Line of Business: Full-serviceinvestment banking and securitiesfirm
Major Challenge Over the NextFive Years: Balancing global exper-tise with local knowledge
Attributes of Effective Leader-ship: Honesty; clear vision;leadership by example
Most Notable Regional Business Trend: Funding Asia’smacroeconomic growth and infrastructure requirements
Favorite Restaurant in Hong Kong: La Bodega
Favorite Hotel in Hong Kong: The Regent
Hiroshi Tsujimura, WG’73
Job Title: Director & General Manager, The Nomura Secu-rities Co., Ltd., Tokyo
Principal Responsibility: Risk management
Line of Business: Securities brokerage & investment banking
Major Challenges Over the Next Five Years: Compe-tition with overseas investment banks in Japan; competitionin the global market with major world players
Attributes of Effective Leadership: Vision; clear mes-sage; balanced strategy
Most Notable Regional Business Trend: Deregulationof Japan’s financial and capital markets
Favorite Restaurant in Tokyo: Kikuya
Favorite Hotel in Tokyo: Four Seasons
Lance Yu Gokongwei, W’87
Job Title: Executive Vice-President, JG Summit Holdings,Inc.; Executive Vice-President & General Manager of Brand-ed Foods Division (Universal Robina Corp.), Quezon City
Principal Responsibility: ManageURC branded consumer foods unit —the Philippines’ largest snack, choco-late and candy manufacturer — andCebu Pacific Air, the Philippines’ firstlow-cost airline and now its secondlargest and fastest growing
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Line of Business: URC — branded consumer foods; CebuPacific Air — low fare airline; JG Summit — holding com-pany in food, banking, textile, property, cement, telecom,petrochemical and air transport business
Major Challenge Over the Next Five Years: Looking forand developing management team and company culturethat will enable company to achieve continued revenue andprofitability growth, particularly in volatile Southeast Asianenvironment
Attributes of Effective Leadership: Creating and com-municating clear vision and culture; developing strong,dedicated management team; staying focused while remain-ing receptive to innovation and new ideas
Most Notable Regional Business Trend: Increasingcompetition in all businesses due to globalization/informa-tion/ deregulation
Favorite Restaurant in Quezon City: Flavors and Spices(Thai)
Favorite Hotel in Quezon City: Manila Galleria Suites
Toshio Iwasaki, WG’70
Job Title: President & CEO, Cresco, Ltd., Tokyo
Principal Responsibility: All
Line of Business: Systems inte-gration focusing on networks andfinancial applications
Major Challenges Over the NextFive Years: To increase productiv-ity in developing computer softwareand to recruit enough skilled sys-tems engineers and programmers
Attributes of Effective Leader-ship: Vision; knowledge of humanhistory; good health
Most Notable Regional BusinessTrends: Financial deregulation and
adaptation to new information technology
Favorite Restaurant in Tokyo: Sushi–Iwa (Tsukiji)
Favorite Hotel in Tokyo: The Palace Hotel
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Sukum Navapan, WG’51
Job Title: Group Chairman and CEO,Navatanee Group of Companies,Bangkok
Principal Responsibility: Policymaking and long-term planning
Line of Business: Real estate, golfcourse, investing
Major Challenge Over the NextFive Years: Overcoming currenteconomic recession
Attributes of Effective Leader-ship: Vision; motivation; goodhuman relations
Most Notable Regional Business Trend: Slow economicrecovery from current recession
Favorite Restaurant in Bangkok: Mayflower (Chinese)
Favorite Hotel in Bangkok: Oriental Hotel
Masayuki Matsushita, WG’70
Job Title: Executive Vice-President, Member of the Board,Matsushita Electric Industrial Co., Ltd., Osaka
Principal Responsibility: Responsible for overseas oper-ations and external affairs
Line of Business: Manufacture and sale of electronicequipment, home and industrial electric equipment andappliances, computer and communica-tions, semiconductors and electroniccomponents
Major Challenge Over the NextFive Years: Globalization of ouroperations
Attributes of Effective Leader-ship: Ability to place the rightperson at the right post; insight andknowledge from a long-term andglobal point of view
Most Notable Regional Busi-ness Trend: Development of amore borderless and globally harmo-nized business environment
Favorite Restaurant in Osaka: Kiccho
Favorite Hotel in Osaka: Rihga Royal Hotel
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Wang Xi, WG’47
Job Title: Vice President, General Reinsurance Corp., Shang-hai Representative Office, Chief Representative, Shanghai
Principal Responsibility: Explore China market
Line of Business: Reinsurance
Major Challenge Over the NextFive Years: To obtain operatinglicense from the Chinese govern-ment, to upgrade staffs and toacquire a major share in China’sreinsurance market
Attributes of Effective Leader-ship: Farsightedness, integrity,prompt and decisive action
Most Notable Regional Busi-ness Trend: China will continueits high growth rate (9–12 percent a
year), U.S. investment in China willincrease and China-Hong Kong-Taiwan will become one ofthe world’s great economic centers
Favorite Restaurant in Shanghai: Mei Long Zhen
Favorite Hotels in Shanghai: Portman, Hilton and Gar-den Hotels
Anil Kumar, WG’83
Job Title: Director, McKinsey & Co., New Delhi
Principal Responsibility: To build a pre-eminent positionfor McKinsey in India by achieving sustained impact forclients; and to provide leadership and direction in the firm,helping build McKinsey in such a way that the institution
has long-lasting impact on society, theeconomy and business enterprise
Line of Business: Focusing onhelping think through and resolvethe issues faced by top managementin terms of strategy, operationsimprovement and redesign, andorganizational performance
Major Challenge Over the NextFive Years: To evolve rapidlyenough that we continue to be thesort of exciting and stimulatingplace that attracts talented individ-
uals. We need to ensure that suchpeople continue to be attracted to the firm, develop in thefirm and become future leaders of the firm
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Attributes of Effective Leadership: A strong belief thatsomething can be made from the raw material, that you canmake a difference; perseverance, focusing on the goal butenjoying the path that takes you there; concern for people.I bond to my clients because of who they are as humanbeings. I find it very difficult to serve them well without this
Most Notable Regional Business Trend: The increas-ing number of mergers and acquisitions. This activity couldquadruple over the coming decade to more than $100 bil-lion. This will come about because of the convergence ofseveral forces: 1) deregulation of the Asian capital marketsas a result of structural over-capacity in a number of indus-tries; 2) the continuing trend towards privatization anddisinvestment; 3) the restructuring of family-owned busi-nesses and conglomerates; 4) the consolidation of highlyfragmented supply bases
Favorite Restaurant in New Delhi: Blue Elephant
Favorite Hotel in New Delhi: The Oberoi ”
R
WHARTON CONFERENCE
ASIAN TWIN FINANCIAL CRISES
MARCH 9-10, 1998
Headquarters, Long Term Credit Bank of Japan, Tokyo
For further information, please contact:
Kikuko Guiraud U.S. - Japan Management Studies CenterThe Wharton SchoolB: 215.898.9992 F: 215.573.2242E-mail: [email protected]
or
Minako ShimanukiWharton Tokyo OfficeB: (03) 3508.4757 F: (03) 3592-2606E-mail: [email protected]
ON
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F E A T U R EPH
OTO
GRA
PH /
PET
ER O
LSO
N
MANAGERS WHO AGGRESSIVELY
PUSH NETWORKING INITIATIVES
IN THEIR FIRMS AND INDUSTRIES
COME UP WITH NEW PRODUCT
IDEAS MORE OFTEN —
AND WITH BET TER RESULTS —
THAN THOSE WHO DON’T, SAYS
PROFESSOR LORI ROSENKOPF
Network News
n December 1992 at JFK Airport, Lori Rosenkopf took herfirst step into a flight simulator used by TWA to traincommercial pilots. It was an opportunity to experiencefirsthand the multi-million dollar machines that she
would eventually feature in an article entitled, “The Coevo-lution of Community Networks and Technology: Lessonsfrom the Flight Simulation Industry.”
But on that particular day six years ago, Rosenkopf’sattention was focused on the cockpit. “The instructors hand-ed me the controls and said to go ahead and give it a try.They didn’t tell me that you are supposed to turn the wheelaway from the direction you want to go in. I taxied alongthinking I was turning left, but instead was turning right. Ibasically drove the plane off the runway.”
While Rosenkopf travels on airplanes these days strictlyas a passenger, she is no stranger to the intricacies of tech-nology. She earned bachelor’s and master’s degrees in
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engineering from Cornell and Stanford, and spent six yearsin the 1980s working at Eastman Kodak Co. as an industri-al engineer and at AT&T Bell Labs as a systems engineer.
“When I was in school I thought I understood how com-panies selected one particular technology over another,” shesays. “Engineers would do problem sets where they com-pared alternative approaches according to very strictperformance measures, such as stress level or throughput.The technology that had the best results won. But once Istarted working I saw that engineers aren’t trained to con-sider the social, organizational and/or political ramificationsof a particular approach and how these factors can affect thetechnology’s ultimate success.
“Engineers like to think that it’s obvious which technol-ogy is the best, but it’s important for managers/engineers tounderstand how many other harder-to-measure factors enterinto that decision.”
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Rosenkopf, the Douglas Vickers Term Assistant Professorof Management, went on to get her PhD from Columbia in1994 in the management of organizations. Since then, herresearch has focused primarily on the kinds of communica-tions networks that exist within and between firms in aparticular industry and the ways in which these networksinfluence the transmission of knowledge, the creation ofinnovation and the development of technology.
She has studied four high-tech industries — semicon-ductors, optical disc, cellular and flight simulation — lookingspecifically at the organizational factors that affect how people choose, measure and compare one technology over others.
To illustrate the role that networks play in these process-es, Rosenkopf sketches out a diagram showing two types ofworkgroups. In the first example, person A’s network con-sists of links to five individuals within the company. Eachof these five also has networking links, but they are all toeach other. The result is a clique, in which each personshares information with members of his or her team, but typ-ically doesn’t look outside for additional data.
Person B is also connected up with five people, but thesefive individuals have links to others outside the group, per-haps in another department, an industry trade group or acommunity organization. So instead of receiving redun-dant information from five people, as A does, B has 20different streams and flows of information. “Managers insituations like these tend to be the ones who come up withideas for more innovative products and services,” saysRosenkopf.
“Engineers like to think it’s obvious
which technology is the best,
but it’s important for managers/
engineers to understand how many
other harder-to-measure factors
enter into that decision.”
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Most work groups, of course, tend to fall somewherebetween these two extremes. And setting up these net-works takes time, intention and the ability to create newways to link up with information sources both inside andoutside the firm.
“Everyone knows this is what managers are supposed todo,” says Rosenkopf, “and in some venues, such as sales, thisapproach is institutionalized as part of the job. But if youare an engineer, or an R&D manager or even a top executive,there are so many issues competing for your attention thatwhen push comes to shove you become very involved inyour own products and processes.”
For engineers and technical managers, network links canbe established through participation in cooperative groupslike standards bodies, task forces, industry-wide committeesand government organizations. On a broader basis, com-panies can create whole new networks of learning throughalliances, through encouraging mobility in the engineeringand executive ranks, through common directors andthrough social networks that emerge informally, such as theafterhours fraternizing that is an integral part of the work cul-ture in places like Silicon Valley.
Firms that have these kinds of networks — bridging rela-tionships as opposed to cliques — not only tend to conceiveof new product ideas more often, says Rosenkopf, “but justas important, they are more successful in getting others tobuy into their ideas.” Consider flight simulation.
Navigating New TechnologyIn the flight simulation industry, Rosenkopf says, a verysmall number of firms produce full flight simulators (FFSs)and flight training devices (FTDs). Full flight simulators typ-ically cost $15 to $20 million each, replicate the flightexperience by integrating cockpit instrumentation with fullmotion and visual capability, and during the 1980s weresupported by commercial airlines, regulatory bodies and air-craft manufacturers. The flight training devices cost $1 to$3 million each, have no motion or visual capabilities andwere supported by academic and military researchers, region-al and general airlines and flight schools.
“Because these are very expensive, customized machinesthat are closely overseen by federal regulators, it’s an arenawhere you don’t have a bunch of engineers going off tosome skunkworks R&D lab figuring out what to do, build-ing it and then hoping it sells,” Rosenkopf says. “Ratheryou have a whole community of people involved in theprocess — the simulator manufacturers, the airplane manufacturers (McDonnell Douglas, Boeing, Airbus), gov-ernment regulators and the users/customers (commercialairlines). They all care very deeply about what the simu-lators should do, and how they should be used to
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demonstrate that the pilot is truly proficient. Conse-quently there are many networks and linkages even amongplayers who are competitors. Everyone ultimately has toagree on the product because otherwise you are investingmillions of dollars building something for which theremight not be a market.”
Rosenkopf’s goal in studying the flight simulation indus-try was to show how interorganizational linkages led to thedominance of full flight simulation approaches (FFS) overmodular approaches for more than 15 years.
She identified 27 different groups involved in the process,including trade associations, professional societies, suppliers,standards bodies, regulators, governmental bodies and man-ufacturers. They ranged from the International Air TransportAssociation Flight Simulation Technical Committee and theAmerican Institute of Aeronautics and Astronautics WorkingGroup on Simulation Facilities to the Wind Shear WorkingGroup and the Royal Aeronautical Society International Sim-ulation Standards Working Group.
“My research showed that it was the same people over andover again — a core of about 15-20 individuals — who wereon many of the committees and therefore were definingwhat the industry would do, what the product would looklike, what the rules would be,” Rosenkopf says.
“By drawing lines between all the different groups I wasable to define this dominant coalition which, it turns out,was fighting for the far more expensive FFS approach overthe less expensive FTD. Members of this coalition were veryorganized, always pushing the same agenda, meeting at thesame forums in different cities, and so forth. Their collabo-ration really propelled the choice of FFSs. It meant that the$15 to $20 million machines were the ones built for pilottraining back in the 1980s, even though the benefits of usingFTDs may have been greater, both in terms of improvedpilot training as well as lower training costs which wouldultimately translate into lower-cost airplane tickets for the public.
“You could conceive of better approaches for trainingpilots that used both FTDs and FFSs but that didn’t getaccepted, not because they weren’t good but because theydidn’t have a coalition of broad network support.”
Interestingly, by the early ‘90s, Rosenkopf says, some ofthe groups that hadn’t been part of the main coalition orclique, and that typically didn’t communicate outsidetheir own small network — such as flight schools in themiddle of Nebraska that trained pilots for the regional air-lines rather than the big commercial players — began totalk together and slowly build new groups. Eventuallythey forced the other coalition to recognize that theremight be circumstances where the $1 million devices are preferable to the $20 million ones. Today, hybrid systems that use both FTDs and FFSs are being explored by the industry.
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“Networks affect technology and technology affects net-works,” says Rosenkopf. “Even after there is closure on adominant design, firms must still consider how networkdynamics may trigger or hinder the next technologicalchange.”
Adhesives and Laundry DetergentsIf you look at any technology, Rosenkopf says, you see thatultimately, over long periods of incremental improvements,there is some dramatic advancement, something that fun-damentally transforms the industry. Vacuum tubes, forexample, gave way to semiconductors, mechanical watchesto quartz watches, x-rays to catscans to magnetic resonanceimaging.
The big question, of course, is which ideas to pursue. “Inhindsight there is always a right answer. For me, that’s whenI fall back on these ideas of networks. Your job as a manag-er is to establish the bridge networks that give you moremultifaceted views of your technology options which thenallows you to make wiser choices.”
Rosenkopf recalls a recent meeting with the technologydirector of the adhesives technologies center at 3M. “His job,he told our group, wasn’t to figure out what particular vari-ant to pursue with respect to adhesives, but rather toencourage people in the organization who normally don’tconverse with each other to begin interacting on a regularbasis. Much of 3M’s philosophy is focused around settingup task forces, councils, different sorts of environmentswhere people from domains that usually don’t intersect arenow crossing paths and sharing information. Managers arelooking to create these unique combinations of knowledgethat don’t naturally occur.”
Rosenkopf cites Procter & Gamble as another example ofa company that is continually looking to expand its frontiers.“P&G’s Tide laundry detergent comes in powder and liquidform and both are very successful,” she says. “But P&G did-n’t just sit back and say they are going to make increasinglywhiter and brighter liquid and powder. One of their exper-iments is with a product called Tide sheet. It’s all-in-onelaundry care that goes into a wash, releases detergent andfabric softener, and then goes into the dryer and prevents sta-tic cling. The only thing it doesn’t do is remove your laundryand fold it.
“It sounds like a great idea. But the company has to thinkabout a lot of side issues, such as the effect of such a prod-uct on related businesses like fabric softener as well as thepotential cannibalization of Tide powder and liquid.
“What has happened so far, however, is that the compa-ny can’t get the product to work. It keeps burning up in thedryer. But P&G isn’t giving up. They are still experiment-ing with this and with all sorts of other approaches such as
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“Firms can end up in what is
sometimes called a competency trap.
They are very good at doing what
they do but they start to drift away
from the path that the majority of
players are focusing on.”
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capsules, pellets and sponges. They are also looking intotechnology that would allow consumers to essentially dry clean garments at home, and they are researching fabrics that would repel dirt more effectively than currentmaterials.
“P&G knows that 19 out of 20 experiments are going tobe total failures, but they also know that the five percent thataren’t will be the seeds of their future business. And betterthat they are cannibalizing their own products than haveUnilever figure out new technology ahead of them.”
The Microsoft FactorTwo years ago Rosenkopf began a study of inter-firm learn-ing among start-ups in the semiconductor industry,analyzing how both formal mechanisms (such as alliances)and informal mechanisms (such as the inter-firm mobilityof engineers, geographic proximity and technological simi-larity) help process knowledge that other firms are alsogenerating. Patent citations are a major component of herresearch.
“Patent citations give you a view into the kinds of knowl-edge that a firm has built upon in order to create newknowledge, similar to the way that academic citations showall the different influences on a scholar’s intellectual devel-opment,” Rosenkopf says. “If I’m looking at patent no.5,200,536, and that cites back to patent no. 4,307,232, I canlook up that old patent, see which firm produced it, wherethey were, what inventors were involved and so forth. Inaddition, patents can give you a little window on what a par-ticular company might be doing five or ten years down theroad rather than now, which can be helpful in determiningits future product strategies.”
Her research shows, among other things, that in the semi-conductor industry, firms that enter into alliances tend todo it with firms in the same geographic region that are tech-nologically similar. “It gets back to networking. Everyoneis looking at the same bits of knowledge and recirculatingthem. You would do better to look at firms in different areaswith dissimilar technologies in order to create bridges tomore unique information,” she says.
Start-ups, Rosenkopf points out, typically tend to be asinnovative or even more innovative than incumbent firms.In the semiconductor industry, “many of the landmark inno-vations — including the memory and microprocessor chips— originated from start-ups. How then do firms with lim-ited R&D spending maintain their innovativeness?”
The answer, she says, gets back to the whole issue of thelearning behavior of small firms and their willingness tolook for external sources of knowledge.
“Firms that take advantage of technological develop-ments at other organizations and don’t just focus on core
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competence or their own particular competitive advantageseem to be the ones that over the longer haul will have moreinfluence on technological development,” says Rosenkopf.“Other firms can end up in what is sometimes called a com-petency trap: They are very good at doing what they do butthey start to drift away from the path that the majority ofplayers are focusing on.
“The idea of developing core competencies is very hot,”notes Rosenkopf, “but the issue is you can only continue todevelop this competence by making sure you are integrat-ing all the developments of other firms. If a company’sattitude is that we are the best and we can do no wrong andeveryone else will follow us, it falls off the mountain soon-er or later ... Technology is so big and broad and moving soquickly that a company has to be monitoring outside devel-opments, figuring how to co-opt those developments intotheir own business.”
The best example of this, Rosenkopf says, is Microsoft. “There are very few things that Microsoft has invent-
ed,” she notes. “Virtually all its successes have had theirroots outside the company, but by now Microsoft has anarray of established platforms and so much money that itcan basically pursue whatever it wants to. Its tentacles areeverywhere. No matter which technology is up and com-ing, Microsoft has started to copy it, created an alliance orbought the firm. Most companies don’t have that level ofresources, and consequently have to pick and choose theirnetworks. In many cases they don’t do enough of thatexploration. Microsoft has the ultimate B network.”
Firms like Netscape, Novell, IBM and Sun Microsystemsare all trying to create the same sorts of networks, the same
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MalleableC O R P O R A T I O N S
A R E S K I L L S I N M E R G E R S , A L L I A N C E S A N D R A P I D T R A N S F O R M A T I O N
B E C O M I N G T H E M O S T C R U C I A L C O M P E T E N C Y F O R T H E 2 1 S T C E N T U R Y ?
[ [e b
s
.
he new corporate offices of the SEI Corporation outsidePhiladelphia have institutionalized a culture of change.There are no walls. The desks and file cabinets are on wheels,connected to power and networks by snaking wire pipelinesdangling from the ceiling. The company can reorganize asquickly as a football team can execute a new play. Employ-ees can move their desks themselves across the office — evento different floors through oversized elevators. No interiordesigners, no space planners, no clawing your way to a cor-ner office. The goal, in the words of SEI founder and CEO AlWest, WG’66, is to create “a cultural signal” that everyonehas to be prepared to change at any time.
Although change has been a concern of management fordecades, today it is more pervasive. Changes used to be dis-crete events — moving from one model to another. Nowchange is continuous and the ability to change quickly isseen as a core competency. As companies need to shape andreshape their organizations more quickly and efficiently,skills in change — including handling acquisitions andalliances — are becoming crucial to competitive success.
It’s Risky Not To
“When everything is changing so rapidly, the riskiest posi-tion is not to change,” says Jerry Wind, Lauder Professor ofManagement and co-author of the forthcoming book, Dri-ving Change (Free Press), with former Fortune editor JeremyMain. When change was less frequent, companies focusedon finding the right structure. “Now they realize they haveto deal with organizational architecture — culture, process-es, people, technology, incentives, and vision, as well asstructure. They are all interrelated,” Wind says. “And becauseof the speed of change, it is not just architecture but strate-gy that has to change rapidly.”
Corporate change has traditionally been a drainingprocess — in resources and human energy. Managers had tomake tradeoffs between rigid efficiency and flexible ineffi-ciency. With change becoming more continuous, managersneed to do both. Like SEI’s office furniture, they need to puttheir organizations “on wheels,” creating the skills and capa-bilities to be efficiently flexible. Two areas where companies
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are developing these skills are in mergers & acquisitions andmanaging alliances.
Managing Acquisitions and Alliances
Acquisitions used to be the domain of high-powered spe-cialists who were brought in to design and close the deal.Alliances used to be long-term marriages. That was whenacquisitions and alliances were occasional events. In today’srapidly moving environment — where acquisition followsacquisition, as industry bound-aries shift and networks ofalliances are reshaped on anon-going basis, the ability toeffectively handle acquisitionsand alliances is becomingessential for the firm, partic-ularly in rapidly movingindustries such as financial services, defense, telecom andbiotechnology.
“As companies increasing-ly move from hierarchicalapproaches to more networkedapproaches, managing acquisitions and building alliancesare becoming a core competency in many industries,” notesHarbir Singh, associate professor of management. “Althoughsome companies are quite sophisticated, the average com-pany is probably underprepared for this. I think there willbe dramatic winners and losers down the road.”
Post-Acquisition Integration is Key
On average, mergers & acquisitions are a wash. Dozens ofstudies in the United States and abroad have found no evi-dence of either improved value or performance overall. It isthe company’s skill at managing the process that appears todetermine whether the acquisition is a boon or a bust.
The skills that count most may not be the up-front abil-ities in valuation and deal-making — the traditional focusof M&A education and research. A recent Wharton study —
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Managers need to put
their organizations
“on wheels,” creating
the skills and capabilitie
to be efficiently flexible
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a ealumni profiles A L U M N I P RALUMNI PROFILES alumni profiles
A L U M N I P R O F I L E S
lumni profilBERNARDO VEGA, W’59: PROMOTING THE DOMINICAN REPUBLICack home, says Bernardo Vega, the DominicanRepublic’s ambassador to Washington, D.C., “Ifelt like the head of the mouse. Here I am likethe tail of the elephant. Washington is a verybig city with many different interests, and I rep-
resent a relatively small country. But it’s a country that hasnow gone through a political process which makes it muchmore attractive to investors.”
Accordingly Vega, former governor of the Central Bankof the Dominican Republic, is concentrating on promotinghis country’s exports and encouraging U.S. investment.
His timing, he feels, couldn’t be better. With the pres-idential election of Leonel Fernandez 17 months ago, theDominican Republic went from having the oldest presi-dent in the hemisphere (age 89) to the youngest (age 43).
But more important than the age difference is the changein politics. “We now have a truly democratic regime,”says Vega. The president has already made 13 trips abroadas part of the country’s efforts to shed its isolationistimage.
There is much to promote about the Dominican Repub-lic, notes Vega. Besides its popularity as a tourist destination,the country is a major source of apparel made from U.S.cloth. Raw material is shipped to the Dominican Republicwhere it is cut, sewn and assembled and then returned tothe U.S. as clothing and shoes.
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In addition, “we feel our future is to become the back office of North America,” Vega says, referring to themany services that are performed in the Dominican Republic — ranging from accounting and data processing toclaims handling and clerical work — for American corpora-tions. “When you call American Airlines to make a planereservation, you are talking to someone in the DominicanRepublic,” he says. “All these services can be done more efficiently because of the country’s excellent communica-tions facilities.”
Inside the Beltway, Vega is lobbying hard for what he calls“NAFTA parity. We want the goods assembled in theDominican Republic, the rest of the Caribbean and CentralAmerica to receive the same treatment at U.S. customs asgoods coming out of Mexico. Because Mexico is a memberof NAFTA (The North American Free Trade Agreement),plants in that country aren’t required to pay taxes on goodsshipped into the U.S. We are.” The NAFTA parity bill hasbeen approved by the U.S. House of Representatives but notthe U.S. Senate.
Vega was born in the Dominican Republic, attendedschool in London where his father was a diplomat, andearned his BS from Wharton. He is well-known in his homecountry as a scholar, businessman, author and governmentofficial. He has been an economics professor at two uni-versities and was affiliated with the Central Bank of theDominican Republic for 19 years, his last two as governor.He has written more than 40 books on economics, historyand archaeology, four of which won the National HistoryPrize. He has been president of the Fundacion CulturalDominicana, an advisor to the government on reform of itstax laws, a frequent press commentator on the economy andpolitics of the Dominican Republic, founder of a local indus-trial consortium, and spokesperson for his country atnumerous international economic meetings, among otheraccomplishments.
But Vega would rather talk about his country than him-self. He mentions that the Dominican Republic has 42major league baseball players in the U.S., and that it is try-ing to become a “tropical Silicon Valley” spurred on by itsburgeoning microchip and electrical goods assembly work.
And last, but not least, cigars. We are the “biggest andbest supplier of cigars to the U.S. It’s a booming industry,”notes Vega, who does not smoke — “I drink rum, that off-sets it” — but does attend many of Washington’s socialfunctions as a way of promoting what could be his country’smost recognized export. “It’s true,” he says, “that things getdone in Washington in smoke-filled rooms.” ”
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A L U M N I P R O F I L E S
BETH STARR, W’87: ON THE A-TEAM IN ASSET-BACKED BONDS
leven years ago, when Beth Starr graduatedfrom Wharton, it wasn’t at all clear that asset-backed bonds would eventually becomeone of the hottest segments of the securitiesbusiness.
What a difference a decade makes. “In 1987 the sale of newissues was about $10 billion a year. In 1997 alone, that figureexceeded $200 billion,” notes Starr, senior vice president andhead of asset-backed research at Lehman Brothers, Inc.
“Even when I was at Wharton, I was interested in struc-tured finance, which includes mortgage and asset-backedsecurities. It seemed more complex than straight corporatefinance,” notes Starr, who spent four years in a similar posi-tion at Merrill Lynch before moving to Lehman Brothers in 1991.
Asset-backed bonds, Starr says, started out being backedby payments on consumer debt, such as credit cards andauto loans. “But recently we are seeing more complex prod-ucts backed, for example, by aircraft leasing or utilityreceivables. As the market has grown, investors have become
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more comfortable. There was even a transaction last yearbacked by royalties on David Bowie recordings.
“Most recently, the new growth sector is the securitiza-tion by commercial banks of their commercial lendingportfolios. It will be a huge market going forward, with $40billion expected in 1998 alone. And that’s only a subsectorof the asset-backed market.”
STARRSTARR
Continued on page 30
ROBERT BYNUM, W’80: FOOD, FUN AND ALL THAT JAZZ
n other countries, says Robert Bynum, “the restaurantbusiness is a more accepted profession. In this coun-try, waiters, bartenders and people who work in thekitchen typically tend to be there because they are in-between jobs … That makes it difficult to find people
who are truly committed to the business and who want tomake it a career.”
That said, Bynum is clearly one ofthe committed. As owner of ZanzibarBlue, an elegant jazz restaurant; Warm-daddy’s, a more downhome bluesrestaurant, and Brave New World, a“world music” dance club, Bynum isone of Philadelphia’s most successfulbusinessmen in what is generally viewedas a tough restaurant/entertainmentenvironment. He has been credited with everything from increasing thecity’s appeal as a travel destination forAfrican Americans to improving racerelations by offering upscale sophisti-cated venues that attract both black andwhite professionals.
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Bynum himself is not your stereotypical restaurateur.“I’m not a schmoozer,” he says. “I try to hire people whocan do that.” But he does appreciate a business that “allowsyou to express yourself creatively. What’s great is that youcan see the impact of a new idea — whether it’s a differenttype of food, beverage, entertainment or direct mail cam-paign — in a fairly short period of time.”
What Bynum finds difficult is dele-gating. He and his brother Benjaminhave run the business together since theestablishment of Zanzibar Blue in 1990.They have 140 employees and a busi-ness plan that calls for opening anotherWarmdaddy’s in Baltimore’s Inner Har-bor this spring, plus a Warmdaddy’sComfort Food take-out restaurant at thePhiladelphia airport next summer (onesuch take-out is already up and runningin Philadelphia’s Bellevue Hotel). Theyalso operate a cabaret lounge calledDeluxe.
“It’s difficult to maintain control andgrow at the same time,” says Bynum,
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RESEARCH WIREBELOW IS A SUMMARY OF SEVERAL RESEARCH PROJECTS RECENTLY COMPLETED BY WHARTON FACULTY.
WHY FIRMS USE CURRENCY DERIVATIVES
lthough derivatives have been criticized as inappro-priate speculative vehicles that can have disastrous
consequences, large corporations increasingly turn to deriv-atives to reduce their exposures to a variety of risks in globalcapital markets. According to a recent study conducted byWharton’s Christopher Geczy and Catherine Schrand andOhio State University’s Bernadette Minton, on average,many of the largest companies are using derivatives in aneconomically rational way in order to reduce volatility intheir cash flows, which, if not otherwise reduced, mightinhibit their investment in valuable projects.
According to the researchers, the majority of Fortune 500companies have potential exposure to foreign currency riskfrom sources such as foreign operations, foreign-denomi-nated debt, or exports. Almost half report using currencyswaps, forwards, futures, options, or combinations of thesetools.
Among the researchers’ findings: companies with rela-tively good opportunities for growth (those that have themost to lose from fluctuations in cash flows) or that arefinancially constrained with respect to short-term liquidity(those that already are short on cash) – or both – tend touse derivatives. In addition, firms with extensive foreignexchange-rate exposure and economies of scale in hedgingactivities are also more likely to use currency derivatives,and the source of foreign exchange rate exposure is animportant factor in the choice among types of currencyderivatives.
The researchers conclude that by hedging cash flowvolatility, firms may increase the probability of havingcash available for investment projects should the needarise. These results, say the authors, are consistent with theexperiences of pharmaceutical companies like Merck,which report that when they do not hedge, fluctuationsin cash flows resulting from foreign currency movementscan have strong adverse effects on important R&D pro-jects. Given that the evidence in the study supports modelsof the rational use of derivatives for hedging purposes, theauthors also suggest that the largest companies in the U.S.are, on average, not engaging in wholesale speculationwith derivative instruments as much as recent media cov-erage implies.
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Christopher Geczy, Bernadette Minton & Catherine Schrand; WhyFirms Use Currency Derivatives – Journal of Finance V52, 9/97, No. 4
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RATING MORNINGSTAR
ook carefully at most advertisements for mutual fundsand you will likely find the fund trumpeting its Morn-
ingstar ratings. According to a new study by Wharton’sMarsall Blume, Morningstar’s rating method is flawed anddoes not represent an accurate way to distinguish among thethousands of choices available in the mutual fund market.Morningstar rates investment performance of mutual fundson a scale of one to five stars, with five stars as the highestrating and one as the lowest. For the past decade, householdshave been net buyers of equities through mutual funds. Rat-ings and rankings that help potential investors distinguishamong the thousands of choices available have becomeessential.
In analyzing Morningstar’s rating methodology, Blumefound that a fund with a long history is less likely to receivea five-star rating than a fund with a short history. He alsofound that Morningstar’s system tends to favor no-loadfunds over load funds: Morningstar assigns its highest tworatings to nearly half of the no-load domestic diversifiedequity funds it evaluates while it assigns its lowest two rat-ings to just over a quarter of these funds.
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Marshall E. Blume; An Anatomy of Morningstar Ratings
CORE COMPETENCIES: ARE THEY A FAD, OR JUST MISUNDERSTOOD?
he term “core competence” has been praised as an out-standing idea and derided as just another management
fad. Many companies that have tried to identify their corecompetencies have had a difficult time doing so and havehad even more difficulty translating those competenciesinto new products, markets, or services.
In a recent report that sheds new light on the relevanceand value of competencies, Wharton’s Ian C. MacMillanand Columbia’s Rita Gunther McGrath describe their newapproach to competitive competence development: Accel-erating Competitive Effectiveness (ACE). The authors, followingfive years of data collection covering more than 1,000 pro-jects in all major industries worldwide, have developed a newdefinition of competencies that combines an organization’sskills, assets and systems in a way that allows the firm toachieve a performance profile that distinguishes it from itscompetitors. They take a fresh look at how successful teams
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maximize their effectiveness and identify four widely heldmisconceptions about the relationship between teamworkand organizational competence. They also provide tools tohelp executives create competence-driven competitiveadvantages that can be measured, monitored, and, mostimportant, managed.
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Ian C. MacMillan and Rita Gunther McGrath; Accelerating Com-petitive Effectiveness: Discovering the Competencies that FuelFuture Growth
NATURAL DISASTERS: WHO’S GOING TO PAY?
n the wake of numerous recent floods, earthquakes,hurricanes and other natural disasters, losses in the bil-
lions have staggered property owners, caused some insurerinsolvencies and triggered large amounts of disaster assis-tance which have created budgetary concerns at thefederal level. While some loss is inevitable, a study byWharton's Paul Kleindorfer and Howard Kunreuther hasfound that the economic devastation can be lessenedthrough risk mitigation measures (RMMs) such as boltinga house to its foundation in an earthquake-prone area oranchoring the roofing for structures located in hurricane-prone regions.
In their study, the researchers worked with three promi-nent natural hazard modeling firms and evaluated theimpact of mitigation in several "model" cities which are sub-ject to earthquake and hurricane damage. In the analysis oftwo of those model cities — Oakland (subject to earthquakes)and Miami/Dade County (subject to hurricanes) — theresearchers found that mitigation is beneficial in reducinglosses to both the insurers and property owners. The bene-fits to insurers come not only through reductions in expectedclaims, but also through significant decreases in worst caselosses and resulting costs of financial distress.
Despite potentially large reduction in losses to propertyowners, the research shows that many are reluctant to investin cost-effective risk mitigation measures. Some reasonswhich may explain this are an “it cannot happen to me” atti-tude, budget constraints and a myopic view of the future,making property owners much more sensitive to the upfrontcosts of mitigation than to the potential future benefits ofthe mitigation measure.
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Kleindorfer and Kunreuther suggest three types of pub-lic-private partnership programs that can encouragemitigation: (1) well-enforced building codes, (2) insurancepremium reductions linked with long-term loans for miti-gation and (3) insurers offering lower deductibles for thoseinvesting in mitigation. The authors suggest that these sameprograms, together with adequate risk-based insurance pre-miums, can also help to promote innovations involving newcapital market instruments to cover a substantial portion offuture catastrophic losses from natural hazards.
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Paul Kleindorfer and Howard Kunreuther; The ComplementaryRoles of Mitigation and Insurance in Managing CatastrophicRisks, a paper presented at the Public Private Partnership2000Conference on “The Uncertainty of Managing Catastrophic Risks”in Washington, D.C. on December 11th
TO BUILD OR NOT TO BUILD: DOES AMERICA HAVE ENOUGH OFFICE SPACE?
or years, many experts have predicted that telecom-muting, downsizing and technology will reduce the
demand for office space. But according to research by PeterLinneman, director of the Wharton Real Estate Center, thedemand for office space in the U.S. will grow substantiallyover the coming decade in spite of significant real rentincreases (ultimately reaching replacement cost levels) andcontinued managerial and technological advances. Based onhis calculations that nearly 5.4 million new office sector jobswill be created over the next decade, Linneman figures thatthe demand for office space will conservatively grow by anannual rate of 1.25 percent in the next 10 years. This meansthat each year the U.S. will absorb roughly the entire officestocks of the Philadelphia and Orlando metropolitan areascombined. In the next decade, an amount equal to two NewYork City metropolitan areas plus one Chicago metropolitanarea will be absorbed. The total increase in office demand, fig-ures Linneman, will range from 800 million to 1.5 billionsquare feet over the coming decade with the bulk of this newdevelopment occurring after 1999. “The challenge facing theoffice real estate sector will be to bring new space on line onlyas it is economically justified,” Linneman says.
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Peter Linneman; Will We Need More Office Space? ”
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‘product’ opportunity with a social message.”Before attending Wharton, Natarajan was a member of the
National Service Scheme program in India and helped orga-nize disaster relief for the Latur earthquake victims in 1993.He is also sponsoring a child under the CRY (Child Relief andYou) foundation. His wife spent three years in Delhi in anorganization founded by Mother Teresa that provides foodto the poor. The couple has a seven-month-old daughter.
Natarajan “is a very impressive individual,” says RobertAlig, WG’87, director of graduate admissions at Wharton.“What’s especially wonderful about him is that he under-scores much of what we look for in applicants to Wharton.He saw a problem — the lack of quality education — andwent out and tried to address it. He showed both commit-ment and initiative.”
Other recipients of the HOPE Unity Award — which hon-ors worldwide leaders who “have sacrificed personal libertiesfor the sake of uniting many in peace” — include NelsonMandela and Jimmy and Rosalynn Carter. ”
SCHOLARSHIP Continued from page 3
SILICON VALLEY Continued from page 12monetary. It was self-esteem, fun, adventure, stimulation. Itincreased the surface area of life.”
Morita has cut back on his involvement at Synopsis,where he now holds the title of business strategist. But he’sbusy as chairman of another start-up called WorldRes, anInternet company that delivers a web-based system for hotelsales, marketing and reservations. Morita, a Presbyterian,also is applying for admission to San Francisco TheologicalSeminary, because he feels that success can sometimes causetechnology entrepreneurs to become proud and self-absorbed and to lose sight of a much bigger picture.
“[People] are working in technologies where they’re lit-erally changing electrons or atomic structures or, in the caseof biotechnology, the nature of the genetic code,” says Mori-ta. “Folks involved in that type of work oftentimes miss themystery of God because there’s a sense that we controlthings. It’s an illusion that eventually breaks, and when peo-ple experience that, they need help in establishing theirspiritual life.” ”
NETWORK NEWS Continued from page 22bridges, Rosenkopf says. “They are either much moreresource limited or they are playing catch-up in establishingthe networks they need.”
All companies say they want to be innovative, Rosenkopfnotes. “They come up with ideas to accomplish that goal,ranging from employee involvement schemes, suggestionprograms, entrepreneurial seed ventures and so forth. They
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generate lots of unique, interesting ideas that could be pur-sued. But ultimately they have to choose among differentoptions. What frequently happens is they choose things thatfit very closely with their established platforms. The choic-es they make squeeze out all the interesting variations theyconsidered. Extensions of all the platforms and technolo-gies are important, but firms also have to emphasize morevariations away from current operating procedure.”
Teamwork: Diminishing Returns “When you have an executive team — people in positionsto make strategy — that has been together too long, studiesshow that they get stuck in the same way of solving prob-lems,” says Rosenkopf. “That means that companies shouldthink about bringing in a new executive, or a new team, inorder to change things around. You shouldn’t be waiting forpeople to retire or leave the organization.
“Of course some companies don’t have this problembecause their industry is so fast moving that it’s hard to keepan executive team together. But in more stable and matureindustries, executive teams tend to go on and on forever.These are the firms that get set in their ways.
“Research on group problem-solving ability shows thatwhen you create a group, it has to learn first how to worktogether. Initially, its performance is poor, then goes up andthen goes down again because of this staleness. The peaktime together is about two years. So you can imagine howan executive team that has been together 10 or 15 years maybe well past the point of peak performance. That’s not tosay you throw everyone, or even anyone, out. You mightwant to add new resources or create several new positionsand change the dynamic that way. Your basic goal is tojumpstart the team.” ” R.W. S.
Ultimately companies have to choose
among different options.
What frequently happens is they
choose things that fit very closely
with their established platforms.
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the largest study ever of post-acquisition management —found that post-acquisition integration skills are one of the key factors in gaining advantage from mergers & acquisitions.
The study examined 483 acquisitions from 1968 to 1996in the financial services industry, involving 52 companiesthat represent nearly half of the assets in the industry. It found that acquiring firms that had specific post-acquisi-tion plans for integration were more likely to generate higher returns.
“Acquirers that have created and documented specificroutines and carried these over to new transactions fare bet-ter than those who treat acquisitions as one-time, ad-hocexercises,” Singh says. “It is not so much how often you doit, but how well you learn from experience.” He says process-es need to be codified and routinized, with manuals,document procedures, consistent integration teams andother knowledge-based processes. “This has more of animpact on performance than factors such as the quality ofthe acquired firm or whether it is an in-market or out-of-market transaction.”
There are many effective ways to design the transitionprocess. For example:■ Banc One has created a highly sophisticated process forintegration, including converting information systems and“affiliating” human resources through training and social-ization. At the same time, product lines are not standardized,and the acquired management team is given a high degreeof autonomy. ■ Norwest uses another systematic approach, achievingmuch higher levels of integration by centralizing data pro-cessing and standardizing product lines. ■ The process at NationsBank, in contrast, not only cen-tralizes the information systems and product lines but alsocreates tight centralized management control by replacingtop management of the acquired firm.
There is no one right recipe for successful post-acquisi-tion integration. Having an effective process and learningfrom each acquisition seem to be the keys to improving performance.
The growing awareness of the importance of post-acqui-sition integration may be why banking institutions areincreasingly using strategies to enhance the effectivenessand performance of the new entity.
Shifting Networks of Alliances
Similarly, the focus of alliance building has shifted fromsolely building single, long-term alliances to managing shift-ing combinations of both short- and long-term allies.Biotech firm RPR-Gencell has established a process for assem-
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bling and transforming a complex network of allies neededfor new gene therapies. It has organized more than a dozenpartners to solve the puzzle of new gene therapies. With only280 researchers in its in-house division, Gencell has accessto more than 2,000 researchers through alliances. It can create new partnerships and dissolve old ones. But to do so, it has had to develop a strong process for managing the network.
“The challenges in biotechnology make alliances essen-tial,” says Thierry Soursac, president of the BiotechnologyDivision of Rhône-Poulenc Rohrer and general manager ofRPR-Gencell, who attended a Wharton conference co-spon-sored by the Wharton Emerging Technologies ManagementResearch Program and SEI Center for Advanced Studies inManagement. “There are many complex possibilities for com-binations of genes, and technologies are evolving at lightningspeed. Even for major corporations, resources are scarce.”Flexibility is also needed. “When you are opening a new wayin the jungle, you don’t see more than 10 feet ahead of you,”he says.
The alliances are designed for flexibility. Gencell estab-lishes milestones so allies can be moved in and out of thenetwork. “The deal is structured so that at each point we candecide whether to continue or step out,” Soursac notes. “Themilestones are linked to specific achievements of technolo-gy within a certain time period. This structure creates a lotof fluidity. In this network, players are coming in and outalmost every quarter.”
The strengths of the flexible network approach are lowerinvestment costs and flexibility to exit or to build a deeperrelationship if the collaboration proves fruitful. “The struc-ture gives the company great access to research,” Soursacsays. “We can adapt to new technology very quickly.”
On the downside, there are legal and confidentialityissues, management challenges and a difficulty with devel-oping the competitive intelligence to foresee comingadvances in technology. Continuity also provides a chal-lenge. But, in biotechnology, the benefits of not being lockedinto a relationship with only one partner whose gee-whiztechnology turns out to be unworkable or unneeded morethan balance these drawbacks.
Overall, a focus on creating the perfect structure foralliances and acquisitions has given way to a focus on estab-lishing the right processes for managing their evolution.“There has perhaps been an overemphasis on structure,”Singh says. “Companies believed that if they structured thealliance properly, it would work. The emerging view is thatwe need to think about a process for managing relationships.Firms more experienced in the M&A arena tend to rely lessheavily on formal contracts and rely more on their rela-tional skills.” ”
Reprinted with permission of Executive Issues, a publicationof Wharton’s Aresty Institute of Executive Education
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STARR Continued from page 25Newspaper articles have noted the unusually large
number of senior-level women in asset-backed bond depart-ments, suggesting that the area was ignored by men untilthe 1990s when it became a hot, high-growth market. Starris more circumspect. Asset-backed bond departments stillhave more men than women, she notes, although “morewomen are in senior positions here than you typically seein other finance areas.”
Starr, who grew up in Silver Spring, Md., and went tohigh school in Clearwater, Fla., lives in Manhattan withher husband and two-month-old baby. She spends most ofher time at work talking to institutional investors, “helpingthem figure out why they should be buying asset-backedbonds and where they should be putting them in their port-folios. I also help them determine where there is the mostrelative value as well as write research reports and developtrading strategies.”
Starr’s expertise in the field of asset-backed securities haslanded her on Institutional Investor magazine’s all-Americanresearch team for the past six years.
Her advice for Wharton graduates is straightforward:“Don’t always look for jobs in whatever the hot area is atthe moment. It’s not necessarily where the most opportu-nities will be down the road. Instead, focus on thebusinesses that interest and excite you, and make your ownopportunities there.” ”
BYNUM Continued from page 25who typically works 12- to 18-hour days and was recentlylisted in Philadelphia magazine as one of 20 people respon-sible for reviving the city’s downtown. “It’s about makingsure people do things the way you want them to. Inevitablythey don’t, whether it’s providing good service to the cus-tomer, buying a new phone system, devising creative ads andso forth. I’m kind of particular.”
Bynum grew up in the business. His father owned sev-eral well-known nightspots, including the Cadillac Club innorth Philadelphia. “My mother worked in the bar there. Iwould go in after school and see people who had been drink-ing a lot. It left me with a negative impression," says Bynum,whose favorite drink is orange juice.
After Wharton he worked and traveled for an import-export business. “When I was in Togo, I remember beingamazed at how much more nightlife there was in this smallAfrican country than in Philadelphia,” says Bynum. He andhis brother, who went to Morehouse College and Philadel-phia’s Restaurant School, felt they had a shot at changingthat. “It’s difficult to get this city to buy into new ideas, sowe had to decide whether our concepts were sellable.” Theywere, although Brave New World, which opened in Octoberand features reggae, Haitian and African music, among oth-ers, “will be a challenge,” Bynum says. “We were a little more
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confident with Zanzibar Blue, because Philadelphia has a jazzbackground. Brave New World’s world music concept ismore foreign.” ”
C-SPAN. The Wharton Club in Washington DC recentlyheld “Networking Gala XVI,” the latest in a series of socialevents that brings together alumni from all local chapters ofbusiness school clubs.
The School also works with alumni clubs to sponsorannual regional alumni meetings in Asia and Europe. Theseprograms bring together alumni, prominent governmentand business leaders and members of the School’s faculty.The 1998 conferences will be in Taipei, Taiwan, on June 12and 13 and in Munich, Germany, on June 25 and 26. Refer to the ad on the inside cover of the magazine for more details.
WHARTON ALUMNI CLUBS ARE … MEETING WITH WORLD-CLASS FACULTY
Wharton alumni have unique access to some of the School’smost celebrated professors as they visit alumni clubs aroundthe world. Faculty not only share their insights into criticalbusiness issues of the day, but also inform alumni aboutissues of strategic importance to the School. In September,Finance Professor Jeremy Siegel, rated by Business Week as the#1 business school professor in the country, spoke to groupsin Seattle and San Francisco about trends in the stock mar-ket. Associate Professor of Management Harbir Singh metwith alumni in Brussels to discuss “Global Leadership andStrategy.” Paul Morin, director of Wharton’s Small BusinessDevelopment Center, dispensed hands-on advice while mod-erating a panel of local entrepreneurs in Boston. Alumni inThailand met with Michael Useem, William and JacalynEgan Professor of Management, when he addressed a “Lead-ership for the Future” conference in Bangkok at the SasinGraduate School.
WHARTON ALUMNI CLUBS ARE … INTERACTING WITH FUTURE ALUMNI
Wharton Clubs are ensuring the perpetuation of a strongnetwork by involving current students — the School’s“future alumni” — in local events before graduation. TheWharton Club of Atlanta annually hosts members of the on-campus Wharton South Club for a weekend-long series ofsocial events and discussions with prominent alumni in thearea. The Northern California Club has partnered with theWharton Technology Club to produce a winter break recep-tion designed to introduce students to alumni currentlyworking in Silicon Valley. All alumni clubs participate in theannual Club Day on-campus, which gives students infor-mation about the benefits of club membership and allowsthem to sign up with their local chapter. ”
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WHARTON ALUMNI CLUBS:
MAKING A GLOBAL IMPACT
The Alumni Club Network helps keep the Wharton experi-ence alive long after graduation. As alumni get more andmore involved with School activities, the range of programsand services offered by these clubs is constantly expanding.
Below are just a few examples of the creativity — andpracticality — that alumni bring to the task of organizingclub events. Underlying the energy and enthusiasm illus-trated by these examples is an important caveat: theWharton Alumni Network will be vibrant and relevant onlyto the degree that graduates participate. If you are notalready involved, contact your local club and help build theworld’s strongest business school alumni network.
WHARTON ALUMNI CLUBS ARE … CREATING ELECTRONIC NETWORKS
Two alumni clubs have gone online with their own websites to keep members as up-to-date as possible with infor-mation about club events, job opportunities, member lists, School news and so forth. The two clubs are: New York(http://www.wharton-alumni-nyc.org) and Atlanta(http://www.mindspring.com/~whartonatlanta/home.htm).Over the next several months, plans are in the works for at least another half-dozen clubs to join these Wharton web pioneers.
Other clubs create distribution lists to send emailreminders to their members about upcoming programs aswell as keep alumni in touch with one another. The newly-established Wharton Club of the Carolinas has strengthenedits fledgling organization through online surveys of thealumni marketplace and advertising of upcoming events.The Wharton Club of San Diego was the first “paperless” clubwhen it implemented an all-electronic system of fax andemail communication with members.
The School is partnering with the clubs in facilitatingthese communications. A list of club presidents and a sched-ule of events around the world are found at the AlumniAffairs homepage located on the School’s web site(http://www.wharton.upenn.edu/alumni/index.html).Check out the information about events in cities to whichyou are travelling on the chance that you could participatein a local club program. In addition, the “Wharton VirtualAlumni Community” is being developed to keep alumslinked to one another and to the School. Be on the lookoutfor more details in a future edition of the magazine.
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WHARTON ALUMNI CLUBS ARE … DEVELOPINGCAREER MANAGEMENT PROGRAMMING
Career management assistance is sought by more alumnithan any other service provided by the School. Our CareerDevelopment and Placement Office (CD&P) and the Officeof Career Planning and Placement Services (CPPS) have anumber of programs in this area, while CD&P and CPPS stafffrequently go on the road to meet and discuss career optionswith individual alumni. CD&P staff recently met with alum-ni club members in Madrid, Frankfurt, Chicago, New Yorkand Philadelphia to describe alumni services.
These programs are complemented by work some clubsare doing to help alumni in all stages of their career devel-opment. Witness the activities of The Philadelphia Club,where a team of club members meets monthly to set upskills development programs, an annual day-long careermanagement seminar, networking events and a Career Man-agement Resources Guide. The New York Club is about toput job opportunities on a password-protected site on itsnewly established web page. The Wharton Club of Wash-ington DC publishes an annual edition of the Career Guide,which includes a directory of club members, articles on hotindustries, interviewing tips, on-line resources and more.
WHARTON ALUMNI CLUBS ARE … NETWORKINGWITH BUSINESS LEADERS IN THEIR COMMUNITIES
Wharton clubs build alliances between alumni and otherbusiness leaders in their communities. They invite promi-nent local business and civic leaders to address club meetingsand often invite members of other professional organi-zations or business school alumni clubs to participate in their events.
For the members of the Wharton Club of Colorado, theDenver Business Series has brought together alumni from tenof the nation’s top business schools on a quarterly basis tofacilitate business and social interaction. The Wharton Clubof London participated with alumni from several Europeanand American business schools in the program “Masters inBusiness Leadership,” an all-day seminar that challengedparticipants to recognize international opportunities, fostera vision, and lead and energize a team of people. Formerambassador Robert Strauss recently met with the WhartonClub of Dallas in an event that not only drew people fromall over that city, but was also carried around the country on
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