Albers School of Business and Economics
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  • Brad Tilden

    Posted by Joseph Phillips, Jr. on 10/29/2013 04:03:42 PM

    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.

     

    Vocation of the Business Leader Conference

    Posted by Joseph Phillips, Jr. on 10/13/2013 03:15:19 PM

    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!

     

    Coursera

    Posted by Joseph Phillips, Jr. on 10/8/2013 05:25:17 PM
    At the Western Association of Collegiate Schools of Business meeting this week we had the opportunity to hear from Andrew Ng, co-founder of Coursera.  It was fascinating to listen to the insights of one of the pioneers of MOOCs (Massive Open Online Courses), which have become a hot topic in higher education.

    According to Ng, his goal is to expand access to higher education, and he does not believe that MOOCs will drive traditional providers out of business.  He believes that Coursera's impact to date has been to bring non-consumers into the market.  He notes that 80% of Coursera's students already have an undergraduate degree and are working full time, and in that mode are too busy to pursue a traditional degree program.

    Ng explained that in the traditional model, what is constant is time on task, but what is variable is learning.  In the mastery model used by MOOCs, that is flipped and what becomes constant is learning and time on task is the variable.

    He also talked about their experience with peer grading, which is better than you might expect.  The median peer grade is highly correlated with instructor grades, plus students like peer grading because it allows them to calibrate their performance against that of their peers in ways that cannot happen in the traditional model.  Coursera's algorithms can also detect "tough" graders and adjust scores accordingly.

    They have also had good experience with peer answers to student questions as opposed to instructor answers. Coursera is also finding that peers take more time to provide more thoughtful and detailed answers than instructors do!

    Coursera is also having good luck with its verified completion certificate program.  Even though they provide significant financial aid for these certificates, revenues are strong and helping to monetize the company. Moreover, they feel they have solved the verification problem with scanned photo IDs and keyboard stoke recognition patterns.

    Coursera is collecting lots of data on student learning, single-handedly amassing more data than all of higher ed has collected from the beginning of time.  Analyzing this data gives them important insights on human learning that will grow in value as more of it gets analyzed.

    After his talk, Ng said that one thing becoming clear is that we will have to "flip" the classroom to stay relevant.  Faculty members or programs that do not do that will fall by the wayside.  Flipping the classroom means putting content up on the web for students to view outside of class and using class time for more higher level work.

    Ng noted that completion rates for Coursera courses are high if you only look at students who complete the first assignment (45%), but for all students runs at a much lower 7%. 

    Asked if Coursera had algorithms to identify the most talented students, Ng did not answer directly, but made it clear this was in the mix with some of his examples of what could be done.

    Asked how he thought Coursera would be different in a few years, Ng responded that it was his hope that under-served groups would be able to receive financial aid to take a collection of Coursera courses (12 was the number he mentioned) that would allow them to find a job and enter the middle class in our society.  It was clear that Ng sees the most important role for Coursera is to create access to education and economic opportunity.

    While Ng sees a noble role for MOOCs, others are worried that Coursera will put professors out of a job.  Ng's response is that MOOCs cannot replace the most important things that faculty do, which is to mentor and advise students.  If anything, technology will allow faculty to reduce the low value activity of lectures and grading homework and allow for more time for high value activity such as mentoring.

    It's tempting to accept Ng's benign description of MOOCs, but something tells me it will not be so easy for the rest of us.  We will have to change to stay relevant.  What will happen to traditional providers if the mastery model gains greater acceptance?  What about the rising cost of higher education (not just what we charge, but what it costs to deliver in the traditional model)?  Will the data advantage of MOOCs give them a significant advantage in improving their product?  And if the faculty role changes to mentoring and advising, will we need as many faculty? 

    All the sudden the future does not look so sanguine!