Wednesday, August 24, 2011
On August 8th we held the ninth annual Albers
Alumni Golf Tournament at the Glendale Country Club in Bellevue. This event has always been important for
bringing Albers supporters together and any money raised is used to support scholarships
for Albers students. This year the
tournament was particularly successful because we had 130 golfers, a great
location, and great weather!
There is a lot of work by volunteers on this event. This year the leaders were Dave Anastasi from
my advisory board and Tony Goodwillie and Scott Warren from our alumni
board. Rob Bourke, our staff member who
handles alumni affairs, also puts in a lot of work on the tournament. The event was developed and championed by our
alumni board and we are very grateful for their support across the nine years
of the tournament! And thanks to all the
volunteers who assisted with the event this year! It really takes a lot of work to do one of
It’s not uncommon for the tournament to be my one and only
outing on the golf course during a year.
This year it was my first time out, but I do have another tournament on
the schedule next month. I don’t mind
playing golf, but it is a very time consuming sport – it takes a long time to
play a round of golf – and so does not work for me.
I am definitely a fair weather golfer. I don’t like to be playing in the rain, and
we have had a few years when it was raining.
Given the nature of my golf game, what is the point of being out there
if the weather is not nice?
For me, golf is very much a team game. I only do scrambles, which our tournament is,
and that should tell you something about the consistency of my golf game!
This year people were really excited about the Glendale
Country Club location, and I agree with them.
What was most appealing to me is that it does not have narrow fairways,
frequently you can get to the green via several different fairways, and there
are very few houses within reach of my ball.
One year one of my partners wanted to know why I was not
using a driver off the tee. I replied
that I was using my driver, but apparently it is so “old school” and small
compared to the mega-drivers of today, that it looks like a five wood. He had the perfect solution, he replied, and
sent me an extra driver that he had – a Sasquatch Diamana S-65. It is exactly as it sounds – big!! And it does make a difference. My drives, whenever it is a half decent shot,
definitely go a lot further and I do not have near as much difficulty coming up
with the requisite two drives that every team member is expected to contribute in
Frequently people ask me how my team faired in the
tournament. I must explain to them that
it is not good form for the dean to win the tournament, so I take all the
necessary precautions to make sure that does not happen. My golf game is usually sufficient to keep us
out of the running, but if I need to, I am not above inviting other weak
golfers to join my team. One year my
team finished fourth and we were dangerously close to winning the third place
prize. I’ve been much more careful ever
Wednesday, August 10, 2011
On August 8th I made a presentation here in Seattle to the Credit Union National Association (CUNA) Economics and Investment Conference, attended by credit union board members and CEOs from around the country. The theme was, “Where Do We Stand Now? An Overview of the Current Economic Climate.” Here are some of the things I said:
- First, Seattle is a great place to have a conference this time of year! No heat, humidity, or mosquitoes!
- The “Great Recession” that lasted from December, 2007 to June, 2009 was the deepest and longest since the Great Depression.
- It has also been the weakest recovery. Over two years later, we have restored less than 25% of the jobs lost and output has still not recovered to its pre-recession level.
- Looking at the components of output – consumption, investment, government expenditures, and net exports – it is investment spending that has not recovered. But it is not business investment in machinery and equipment, it is business and residential construction that continue to lag.
- The Fed moved aggressively to address the stress in financial markets and the economic slowdown. The Fed is out of bullets. It has done everything it can do.
- The Fed has moved so aggressively that there is a risk of inflation. I admit to having a hard time figuring out exactly what that risk is.
- The federal government moved modestly to stimulate the economy. Much of the deficit has to do with fighting two wars (without raising taxes for them), tax cuts, and the cyclical impact on the budget, not specific steps to enlarge the government sector.
- The current discussions on the budget deficit are not well informed because they fail to differentiate between cyclical and structural deficits. We need to focus on the latter, and that is best addressed by medium to longer term cuts in spending (especially entitlement spending), not short term cuts that make it more difficult to put the recession behind us.
- There are a number of factors weighing down the recovery – the housing market, Federal budget uncertainty, energy prices (although that could be changing), government downsizing, weak income and job growth, consumer deleveraging, and struggles in Europe.
- There are few sources of strength – exports (especially to Asia), business ready to invest when they are convinced that consumers will be there, low interest rates, and maybe energy prices are starting to drop.
- That all adds up to continued modest growth of 2-3%, not good for an economic recovery. I don’t see the double-dip that other people see. When a recession is caused by a financial crisis that impacts lower and middle income households, history shows a long, slow recovery.
- If Standard and Poors wants to downgrade Treasury debt, that is fine, but that means they need to do some other downgrading, like for France. Treasuries are definitely lower risk than OATs!
Tuesday, August 09, 2011
Fordham University recently hosted a meeting of academics and business people here in Seattle. As part of the event, they convened a panel of five business school deans to give their perspectives on the Purpose of Business. Here are some exerts of what I said in the discussion:
“The purpose of business is to meet human needs, in two ways. First, provide goods and services to customers and, two, to provide employment and opportunity to those involved in the enterprise.
The first includes basic needs that take the form of goods and services, but also less urgent goods and services that contribute to an improved standard of living. The products produced by business contribute to the common good by meeting basic needs as well as less critical needs.
Regarding the second purpose, employment is important. It provides income to meet basic needs, but not just that. Employment is also a way that people define themselves and find meaning and fulfillment and feel good about themselves. In brief, it provides human dignity.
The business also needs to be sustainable, which influences how it does business. The focus is on long term customer relationships, not a quick turn. The environment cannot be excessively exploited in the process of producing goods and services, since that is not sustainable. To be sustainable, the business also needs to operate profitability, so that it provides incentives for capital, but profitability, particularly when measured in the short term, is not the sole purpose of the business.
Think of examples of successful businesses that you know of – Costco, Boeing, Paccar, Amazon, or Facebook. Is it profitability that gives owners and employees pride and excitement? Or is it meeting customer needs and what they produce and do that turns them on? Looked at another way, Microsoft, Alaska Airlines, and Weyerhaeuser are making money now but do not seem to get any credit for it. Salesforce.com, LinkedIn, and Shutterfly don’t make much money, but are widely admired. It has to be some combination of both profits and mission that gets people excited about what they do….
One reason that business should be about meeting human needs and contributing to the common good is that society creates an environment that allows a business to operate. Without that supportive environment, a business could not be successful. I have in mind such things as property rights, enforcing contracts, educating and training the workforce, overseeing a monetary system and well functioning financial markets, maintaining law and order, and providing infrastructure like highways and ports that support commerce. Businesses get a “license to operate” so to speak in this supportive environment.
I would suggest that much of my thinking on this issue is influenced by Catholic Social Thought, and I am not saying that to please our Catholic university host, Fordham University.
A major tenant of CST is the “dignity of the human person,” and how work contributes to human dignity. Thus, a business that “does not enhance its workers and serve the common good is a moral failure,” no matter how profitable. It was Rerum Novarum (On the Condition of Labor), the first Papal encyclical in CST tradition issued in 1891, that first raised questions about the treatment of employees. Subsequent encyclicals have gone on to elaborate and press that theme. For example, Quadragesimo Anno (1931) posed the “just wage” as one that could support a family and allow for some accumulation of property.
But back to the role of profits, Pope Benedict says the following in the most recent encyclical, Truth and Charity (Caritas in Veritate): “Profit is useful if it serves as a means towards an end that provides a signal both of how to produce it and how to make good use of it. Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty.”
In sum, my view is that the purpose of business is to provide goods and services to customers and, two, to provide employment and opportunity to those involved in the enterprise. Business enjoys a supportive environment provided by society and, in turn, it boosts the standard of living of society and contributes to the common good.
Wednesday, August 03, 2011
In late June I attended a meeting in Washington DC to discuss the creation of a system that helps MBA students select a program. It is being developed as an alternative to the MBA program rankings that have become very prominent and influential.
The meeting was called by the Business Education Alliance (BEA). The chief organizers are three business school deans – Larry Pulley (William and Mary), Tony Hendrickson (Creighton), and Caryn Beck-Dudley (Florida State). They have been working on this for nearly two years and now are on the verge of founding a non-profit organization to provide this tool to aspiring MBA students.
There are lots of rankings out there about MBA programs, particularly full-time MBA programs. We do not have a full-time program, so it is not something I spend much time on. But as far as program rankings in general go, I don’t know of any leader in higher education who really likes them. Still, they are part of our world now, and they are not going away any time soon.
I’ve always been struck by how students, alumni, and advisory boards get excited about rankings. They really get people’s attention. Albers has been fortunate enough to receive recognition in some of the rankings out there, particularly in US News and World Report and BusinessWeek. Still, anyone with any sense should know it is very difficult to compare a few schools vs. one another let alone the 550 AAACB accredited business schools in the US or the more than 13,000 business schools worldwide. All are doing very similar and at the same time very different work. The experience of an undergraduate student in Albers is very different than one at Seattle Pacific University or one at any of the three University of Washington campuses. To try to rank even this small group against one another is very difficult, since the student experience can be impacted by so many different factors, including:
- Students choose to participate in different program opportunities, thus there is no one student experience in a business program. For example, one student could choose to be in our Mentor Program and another not. That will have an impact on their Albers experience.
- Students enter the program at different entry points, for example as incoming freshman, as a sophomore transferring from another school on campus, or as a junior transfer coming from a local community college. Each will yield a different experience.
- Students have different interests, skills and aptitudes, and these may match better in one program than another.
- Not only will it make a difference as to which faculty the student will have in classes, and who the student’s academic advisor will be, but who will be the friends and support group of the student on campus? Two students in the same year and major will have a very different experience based on this alone.
All these factors and more make it very difficult to put much stock in rankings as a tool for selecting the right school to attend.
The approach of the BPA is to identify about 20 factors that describe an MBA program. The inquiring student inputs his or her preferences and an algorithm identifies the programs that best match those preferences. There is also an audit function so that the integrity of the information provided by schools can be checked.
Whether the BPA can pull this off remains to be seen. Stay tuned!