Albers is accredited by AACSB International - The Association to Advance Collegiate Schools of Business. As of July 2014, less than five percent of the world’s business schools and less than one third of U.S. business schools have achieved business accreditation from AACSB.
Brad Tilden, President and CEO of Alaska Air Group, was the guest speaker for the Albers Executive Speaker Series on October 24th. He opened his talk by describing the difficulties faced by the airline industry, noting that since the industry was born it has not been profitable on a cumulative basis. Billions of dollars of capital has been destroyed and bankruptcy has been a frequent occurrence. Of late, the industry has consolidated into four major players who control 90% of the US market. That has left Alaska with 3.5% of the market, yet despite that small market share it has been one of the few profitable domestic airlines.
What are some of the reasons for this? One that Tilden mentioned was that performance at the margin can really make a difference. Where you decide to spend your last $100k can make a big difference, they have found. Also, he credits Alaska's practice of bringing in business leaders from other organizations to learn from them has also been very helpful. Two examples he cited were Jim Sinegal from Costco Wholesale and Orin Smith when he was at Starbucks.
How does one survive in an industry of big players? In this capital intensive industry aren't their overwhelming economies of scale that a small player misses out on? That may be true, said Tilden, but there are also diseconomies of scale. Being smaller gives one less to worry about and brings fewer coordination problems. Tilden also gave credit to Alaska's use of "Lean." These process improvements have been especially helpful in aircraft maintenance, and the Lean method keeps you from thinking you have everything figured out. You are much more open to continuous improvement. Simplicity is also key - it is not a good idea to be flying 14 different airplane types, for example!
When asked what he wanted his legacy at Alaska to be, he replied he wanted the company to remain an independent, be known as a good employer to work for, and leave a strong leadership team in place.
Jim Sinegal talks about Sol Price as his mentor. Who was Brad's mentor? He mentioned his predecessor, Bill Ayer, and his father. Both were good role models for him.
When asked what advice he would give to college students, he noted two things - (1) When it comes to your career, make sure you do something you really enjoy, and (2), Don't play it safe with your career. Take risks. Apply for that promotion if you want it.
Finally, he discussed the importance of the people in the organization and creating a culture where employees feel empowered and going the extra mile is recognized. He also stressed the importance of safety - both for customers and employees.
Brad Tilden drew nearly 300 people to Pigott Auditorium, and they left very impressed with the leader of Alaska Airlines. It was both what he said but also how he said it. His sincere and approachable demeanor impressed his listeners.
From October 11 to 13 the Center for Business Ethics at SU organized a conference inspired by The Vocation of the Business Leader (VOTBL), an important document released by the Vatican that discusses the role of business in society. VOTBL was released in March, 2012 by the Pontifical Council for Justice and Peace.
Why is VOTBL so important? Catholic social teaching goes back to 1891 with the publication of Rerum Novarum, and the various encyclicals over the years have dealt with a number of issues related to business indirectly, not directly, and often in language that is hard to follow. This is the first document from the Vatican to directly address the role of business in society and to do so in a readable and sympathetic format. If you have not read the document, you can find it at: http://www.stthomas.edu/cathstudies/cst/conferences/Logic%20of%20Gift%20Semina/Logicofgiftdoc/FinalsoftproofVocati.pdf.
One of the keynote speakers for the conference was Professor Michael Naughton, from the University of St. Thomas in Minneapolis. Naughton was one of the chief architects of the document. In his opening address he gave a nice overview of the document. He noted the document is asking "What is the nature of the good business?" and what does that mean for a business leader? He reminded the audience of "The Logic of Gift," or basically what is known as, "To those who much is given, much is expected." Business leaders have been given much, and therefore should be grateful for that. That gratitude should motivate them to lead a good business.
What does a good business look like? Naughton provided a nice framework for the six core principles of a good business:
"Good goods" - provide goods and services that meet true human needs and maintain solidarity with the poor by also meeting their basic needs.
"Good work" - create a workplace that supports the dignity of the worker and practice the principle of subsidiaridy in the organizational structure.
"Good wealth" - create wealth in a sustainable manner and distribute it in a just fashion.
(Naughton recalled that we first met in 1991, when I was at Creighton University and part of a group organizing a conference to commemorate the 100th anniversary of Rerum Novarum. Mike noted that he was just out of graduate school and happy to find a group of scholars with interests similar to his own. He has gone on to be one of the world's leading scholars on Catholic Social Teaching in the economic sphere.)
The keynote address was followed by a series of panel discussions throughout the day on the 12th and into the morning of the 13th. They were organized to provide different faith perspectives on the documents, so that not only Catholics were involved in the discussion. The organizers worked hard to make this an interreligious event. Protestant, Jewish, Hindu, Mormon, and other perspectives were included.
The panels included a mix of highly regarded academics, such as Dr. Patricia Wehane from DePaul University, Dr. Ken Goodpaster from the University of St. Thomas, and Dr. Moses Pava, business dean at Yeshiva University. They also included representatives from the business sector such as Sherri Flies from Costco Wholesale, Brian Mistele, founder of INRIX, and Mark Seidl from REI.
John Dienhart, our Frank Shrontz Endowed Chair in Professional Ethics, was the main organizer, but he had lots of help from colleagues in Albers and across the campus. This included Professors Jessica Ludescher and Marc Cohen in Albers, and Michael Trice from STM and Fr. Peter Ely, SJ, SU's VP for Mission and Ministry. There were plenty of students who assisted, especially John's graduate assistant JP McCarvel.
The conference was a big success. We estimate that over 200 student, faculty, staff, and community members participated. Congratulations to John and his team for putting it together!
VOTBL needs to be part of the student experience in the Albers School, and we are in process of figuring that out. We have had some success with that, but more work needs to be done. In the meantime, I encourage you to read VOTBL if you have not already done so!