“I had to learn it the hard way,” says Ramos, Vice President of Engineering at Schneider Electric, one of the multinational companies that not only have a huge Nashville presence but also make Vanderbilt and Music City an ideal hub for this new style of international education.

Schneider Electric brought Ramos, a native of Mexico, to Nashville, and he has since grown with the company, tasting the increasingly global flavors of modern business firsthand. His experiences have afforded him valuable insight, which Tami Fassinger, BA’85, Associate Dean of Executive Programs and head of the Americas program at Owen, gladly welcomes. Ramos is among several alumni who have helped shape the program with their advice.

Mario Ramos

Fassinger stresses that businesses cannot rely on the same old parochial strategies in this global era, and so the Owen School has tailored the Americas program, which officially launched in early August, to offer its participants something new and different. To borrow a phrase from modern combat journalism, the program “embeds” students in international experiences while they work toward their MBAs. In addition to learning about global business management practices in the classroom, students gain real-world preparation on the ground, both in Nashville and thousands of miles beyond.

All about Relationships

Owen isn’t alone in this Americas venture. Three other business schools of similar prestige—Fundação Instituto De Administração (FIA Business School) in Sao Paulo; Instituto Tecnológico Autónomo de México (ITAM) in Mexico City; and Simon Fraser University’s Beedle School of Business in Vancouver, British Columbia—also are participating. The four partner schools plan to each enroll 15 students in the future, capping the total for every class at 60.

The Americas students spend the first year at their home schools, with some interaction with one another via the Web. Global study teams are then formed during the second year by making use of technology for conferences and virtual meetings. The second-year students also rotate together to each campus for immersion in weeklong residencies that incorporate each locale’s cultural advantages and challenges.

Fassinger says that students will work both virtually and hands-on “across borders, language, culture and time zones … on various coursework assignments and a yearlong capstone project.” The academic payoff is that each student will graduate with an Americas certificate conferred by the four participating universities as well as an MBA from his or her home school.

“More important,” she says, “they will have taken a deep dive into expert topics by Americas region and school, spanning everything from family-owned enterprises unique to Mexico to cross-cultural negotiations in Canada to sustainability models in Brazil to launching new ventures in the U.S.”

As a practical matter, managers will be sharpening international networking skills each step of the way. Learning how to apply those skills across linguistic and geographical borders is one of the most important aspects of doing business globally, says Ingrid Calvo, EMBA’09, a native of Colombia who works as International Controller for Gibson Guitar.

“In other countries it’s mostly about relationships,” as opposed to in the U.S., where “you get down to business right away,” she says. In her work, which now has her heavily focused on China, it’s critical to establish and maintain business relationships with government officials and business partners.

Ingrid Calvo

Calvo can testify to the effectiveness of her Vanderbilt MBA in these situations. “It has provided opportunities for me, has strengthened my core skills in managing global business, and has better prepared me for additional expatriate assignments,” she says.

She admits, though, that the international component of the Americas program would have been ideal, had it been available. “If given the choice,” she says, “I would have preferred to have been part of the Americas program.”

Ramos, who hopes to direct Schneider employees into the program in the future, knows from experience how valuable cross-cultural pollination can be. “When Tami first mentioned the possibility of opening up an Americas program, I was pretty excited,” he says. “It’s a tremendous opportunity. There are a lot of people in Latin America who could benefit from this type of program.”

And it’s equally valuable for Americans looking to the greater world market for production and distribution, Ramos adds. “It will help companies managing teams or trying to build their businesses in Latin America,” he says. “It will give them a lot of insight into the local environment—how to do business there, how to deal with the government, how to do business in a different culture.”

Schneider Electric, a global specialist in energy management, has 130,000 employees worldwide, producing a variety of systems that are designed to manage and conserve energy. The company has spread into markets like India and China, but Ramos says the Americas program’s lessons will translate anywhere. “There are various ways of going to market. Organizational behaviors are affected by different cultures with different values,” he says. “You need to understand how that works to really be able to do business in these countries.”

Looking at an Entire Hemisphere

As new as the Americas program is, international business has long been a focus for Owen. The idea for such a program was first planted soon after the establishment of the North American Free Trade Agreement (NAFTA) between the U.S., Canada and Mexico in 1994. “About 15 years later, we were finding that our Executive Development Institute client companies were looking at an entire hemisphere rather than individual countries for management decisions,” Fassinger says. “When we started to notice that, we thought that we needed to address it pragmatically.”

In the late ’90s, Owen experimented with a short-lived International Executive MBA program based in Miami. The IEMBA students were bright and hard-working—many of them have since gone on to prosperous careers in the Americas—but the logistics of the program itself proved too challenging. Among the roadblocks to the Miami venture were the lack of a Vanderbilt facility in the city and the added complications of monthly travel time and expenses for participants.

After talking with IEMBA alumni, Owen took steps to ensure that the Americas program is more practical than the Miami experiment. Fassinger says physically locating the new program at Vanderbilt is important because the university already has an acclaimed Center for Latin American Studies with which Owen can share human and academic resources. Also the decision to schedule weeklong residencies during the second year, as opposed to biweekly or monthly classes in each location, means less travel for those involved.

Tami Fassinger

In all, the Americas program provides a more balanced approach than its IEMBA predecessor—as Fassinger says, it’s “a complete immersion experience and a complete Vanderbilt experience.”

Of course, practical concerns, such as tuition, credit and diplomas, had to be worked out prior to launch. “One of the things institutions struggle with is: How do you transfer credit? How do you figure out admission differences?” Fassinger says. “We decided only to enroll our own students and not share revenue, so we went with schools that have great admissions standards of their own. Second, we figured out a formula where we all are responsible for an equal part of the delivery of the second-year residency experience.”

Each of the partners brings something unique to the residency weeks. For example, in Vancouver, an international city with strong Asian business interests, focus will be placed on cross-border negotiation and collaboration. Meanwhile Brazil will offer lessons in sustainability and bottom-of-the-pyramid marketing. In Mexico, where most of the businesses are family-owned, attention will be paid to global competitiveness among such companies.

“When they come to Vanderbilt, they will look at American innovation,” Fassinger says. “We’ve been talking to the big companies that make Nashville great: Nissan, Bridgestone, LP, Schneider, Gibson. And we will use the Nashville Entrepreneur Center to show how to launch startups that can become the next multinational companies.”

Interaction with prospective students in the U.S. showed there was a need for the Americas program. “They wanted a deeper global experience than what we had previously offered,” she says. “We surveyed our pool of candidates, and it was clear there was a demand for it.”

Ramos says that Vanderbilt already has an international mindset, but in the past, much of the discussion was “very U.S.-centric” by nature. “One of the important things about this program is that by having discussions with people who do business directly in those countries, we’ll have debate and ask questions as to what is the right answer,” he says. “The conversations will be diverse.”

William Thomas

Universal Business Principles

William Thomas, BE’92, EMBA’11, Executive Director of Quality and Sales Engineering for Bridgestone Americas, just graduated from the Executive MBA program in July. Like Ramos, he is somewhat envious of the opportunities that await the students enrolled in the new Americas program.

“If this international program had been available when I was starting in ’09, I absolutely would have taken it,” he says. “Our business, the tire business, is becoming more of a global game. The managers in the 21st century need a global perspective.”

Bridgestone provides training to prepare employees for the international market, but Thomas emphasizes the value of the Americas program. “By having them physically take classes in Canada, Mexico and Brazil, it puts them in contact with other cultures and begins the process of changing the way they think about doing business in another country,” he says.

With Bridgestone, Thomas learned international business by serving as Assistant Plant Manager, Responsible for Quality Assurance, at the company’s Buenos Aires facility. “What I discovered with my experience in Argentina is that there are universal business principles that can be applied across borders,” he says. “But the cultures you operate in require you to modify your approach to make yourself more effective.”

Thomas is now investigating how this new program might benefit his staff. “I’m talking to two of my managers in Argentina who are contemplating going back to school and getting their MBAs in Buenos Aires,” he says. “I asked them to consider going to Sao Paulo and getting in this Americas program instead [through FIA, Vanderbilt’s partner in Brazil].”

Thomas also looks around the Nashville office to identify Bridgestone managers who are hoping to supplement the international preparation they already receive at the company. One such employee is enrolled in the inaugural Americas class: Bridgestone’s Phillipia Pundor, Section Manager, Global Mobility and Immigration.

Phillipia Pundor

“We have a number of teammates who work on foreign assignments outside their home countries,” Pundor says, pointing to the approximately 50 expatriates she assists throughout South and Central America as well as in the Netherlands, Portugal, Liberia, the Democratic Republic of the Congo, India, Thailand and Japan.

Pundor, who has a background in industrial/organizational psychology, says the Americas program offers precisely what she needs. “I’ve looked at a number of different graduate programs, and Vanderbilt was definitely the most attractive,” she says. “This will put me in a position of growth and opens a lot of avenues into roles across the organization.”

Fellow student Jon Haworth has a similarly positive outlook on the program. He, however, took a more indirect path to it. The Vice President of Product Innovation and Plant Operations at Des-Case Corp., which manufactures filtration products for industrial lubricants, was set to enter the Executive MBA program a year ago, but the birth of his son put his enrollment on hold.

It was a fortunate turn of events.

“As they rolled out the Americas program, I quickly jumped over to that, because the international component of our business has been growing so fast. There will be things I learn from Day One in this program,” he says. “It’s exactly what I need to move up in this company.”

Jon Haworth

The son of Baptist missionaries, Haworth grew up in Brazil and is fluent in Portuguese. He also has worked abroad quite a bit for Des-Case, which sells products in 52 countries. His experiences overseas have impressed upon him the need for broader international skills.

“The American way doesn’t always get the job done,” he says. “On the other side of the world, they approach it from a totally different perspective.”

His understanding of this fact has made him appreciate the opportunity at hand all the more. “It’s not just a typical international program where you talk about how business is done elsewhere,” he says. “In this case, you actually experience it.”

He adds, “I haven’t heard it stated this way elsewhere, but in my opinion, while this program focuses on the Americas, the things you learn can transfer elsewhere. It’s really a global program, even though it’s not marketed that way.”

Fassinger agrees. “Jon is right that the learning can transfer,” she says. “We just made the decision to be more thorough about the nuances in the Americas, rather than spread ourselves too thin across many cultures.”

Michael Bowling

Congruent to the Culture

Michael Bowling, EMBA’97, grasps the idea of transferring knowledge as well as anyone. He talks with satisfaction about his experience as an Executive MBA student and how it helped him prepare for his current role as President of AT&T Mexico—a remarkable leap considering that he had never traveled outside the U.S. prior to his Owen experience.

Bowling went to work for AT&T 21 years ago with an electrical engineering background, but it was his desire to explore a different career path that brought him to Vanderbilt.

“I looked for a program that had the kind of impact that I thought I wanted on my career,” he says. “I wanted an executive program to learn the business half to help in my progressions.”

The lessons he learned were invaluable, he says, adding that Owen planted the seed that led him to work in Venezuela, Peru and now Mexico. “On our class trip [the required international residency], I think it was the first one for the EMBAs, we were here in Mexico City,” he says, recalling that he sat in the city center and “sketched out a plan to be an expat.”

After that trip, he became determined to take his career global.

“And here I am,” he says with a laugh.

These days, he’s loaning his expertise to Fassinger and her colleagues at ITAM in Mexico City. “I’m very positive about the program,” he says. “I think it will be great.” In particular, he believes the expanded international study component will pay off.

“It’s critical for leaders in business today to not just understand, but to be able to be effective in a global environment,” he says. “What you’re trying to do is reach your business objectives, but they should be congruent to the foreign culture you’re operating in. You aren’t going to be able to change the foreign market to fit your paradigm.

“The ones who aren’t successful are the ones who can’t drop out of their own mindset, the ones who say, ‘This is how we do it in the U.S.’ You might as well say, ‘This is the way we do it on the moon.’”

From left, Faith Rhoades, Carol Slivka, Kelli Powers and Nat Richardson

Few people get to witness the evolution of a brand new hospital from an insider’s perspective. Even fewer get to play a hand in how it takes shape. Yet, thanks in no small part to Vanderbilt’s Master of Management in Health Care program, four health care administrators from Huntsville, Ala., have had just such an opportunity.

Kelli Powers, Nathaniel “Nat” Richardson, Faith Rhoades and Carol Slivka—all members of the MM Health Care Class of 2011—spent the better part of the yearlong program collaborating on a capstone project to evaluate a new facility being built by their employer, Huntsville Hospital. Their project has continued to influence decision making in the organization well after graduation, but it isn’t the only part of their studies that has left a lasting impression. During their frequent trips up Interstate 65 to the Owen School, the four forged deep bonds with each other and their classmates, and the resulting friendships and experiences they’ve taken back with them on the southbound return have been life-changing.

“I haven’t felt so pumped about a program and the educational experience in a long time,” says Richardson, Vice President of Operations at Huntsville Hospital. “What’s been energizing has been the number of individuals in the classroom who are so spread out across the health care spectrum. We sit in a room with so many dynamic minds.”

Richardson was the first from the Huntsville team to commit to the MM Health Care program, which is designed to provide students with the business fundamentals and skills to manage people, programs and processes within health care organizations. While firmly entrenched in his present position, he wanted to further his education through a degree that would have direct benefits for his current job and career trajectory.

Jeff Samz, who had previously worked at Vanderbilt University Medical Center, brought the MM Health Care program to the attention of his colleagues at Huntsville Hospital.

Richardson heard about the MM Health Care program from Jeff Samz, Chief Operating Officer of Huntsville Hospital and former CEO of the Vanderbilt Heart and Vascular Institute. “He knew I was seeking the next level in my career,” says Richardson, who aspires to a C-level position at a large hospital system. “This program seemed to provide the most value and also aligned with where I am in my career.”

Samz’s and Richardson’s enthusiasm soon caught the attention of Slivka, Huntsville Hospital’s Director of Finance; Rhoades, Director of Medical Staff Services; and Powers, CEO of Athens Limestone Hospital, which is affiliated with the Huntsville system. Rhoades had begun graduate work elsewhere but readily switched gears for the chance to study at Vanderbilt with her colleagues.

“When the human resources director asked me if I was interested in changing to Vanderbilt, I said, ‘In a nanosecond,’ because of the reputation of the school and because I had a chance to take it with three other people from my organization. That’s life support,” Rhoades says. “The other contributing factor was the health care focus.”

Slivka shares this sentiment. “I don’t see myself doing something outside of health care. If you’re going to do this at this point in your life, you want to have some immediate take-away and provide some real-life value back to your company,” she says. “Huntsville Hospital has been willing to make an investment in me for knowledge I’m going to bring back and use. I really like that part of it.”

Huntsville Hospital enthusiastically backed the team approach to graduate education as it naturally aligned with the organization’s succession planning. “They’re interested in advancing their careers, and it’s a way for us to retain some of our top people,” Samz says. “Investing in them, we think, will pay off not only in the skills they learn in the program but it will keep them with us.” Samz also believes the fact that the four formed a “working pod” will continue to benefit the organization in the long term.

The program was appealing to Huntsville Hospital in other ways, too. There was Vanderbilt’s stellar academic reputation to consider, as well as the MM Health Care program’s flexible format, which is geared toward working professionals. Plus, the students were exposed not only to Vanderbilt University Medical Center, which is widely regarded for its patient care, research and biomedical education, but also to Nashville’s dynamic health care business community, which includes Hospital Corporation of America and a variety of other health care companies.

“There’s just nothing else like the Nashville market,” Samz says.

The Future of Health Care

“What the world needs is changing,” says Dr. Mark Frisse, MM Health Care Faculty Director, Professor of Management and Accenture Professor of Biomedical Informatics at Vanderbilt. He explains that the MM Health Care program helps students see way beyond the limits of their institutions to the future of health care.

“First we expose them to a radically broader view of the world,” he says. “Then we bring the world into the classroom. This can only be done a few places in the country.”

Larry Van Horn played a key role in launching the MM Health Care program.

Larry Van Horn, Associate Professor of Management and Executive Director of Health Affairs at Owen, adds, “The cost, quality and access problems facing the U.S. health care system are monumental. The clinician who understands the science of medicine and the science of business is in a position to create more value for our health care system.”

MM Health Care students attend classes every Thursday night and one weekend each month. Traditional B-school classes—such as marketing, finance, accounting, logistics, operations and leadership—are taught on weeknights, while the weekends are dedicated to health care. Frisse believes the classroom experience serves as a great leveler for everyone in the program. “You can’t tell the doctors from the administrators,” he says. “They have a uniform identity. They’re all students.”

The classroom benefits the faculty as well, he adds, noting that the high caliber of students helps energize the instructors. “The best teachers want to run these classes because they learn from these experiences,” he says.

Mark Frisse

During the course of the year, students develop close friendships, becoming sounding boards for one another. “Every day we’re texting or Skyping or emailing. Everyone relies on one another. Everyone wants everyone to succeed,” says Rhoades, who came into the program with a bachelor’s degree in health care management.

Richardson echoes that sentiment. “There’s a wealth of knowledge in that room. Everyone is from different walks of life and different regions of the country,” he says. “You can’t put a price on that much mind value.”

For Rhoades, the lessons of the classroom often can be implemented at work on Monday morning. She credits the high-quality instructors. “That started from Day One in the very first class. That is what knocks the socks off me. They are beyond experts,” she says.

Powers agrees. “It could not have been timelier. I’m looking at productivity and wait time [at Athens Limestone], and I’ve been able to bring what I’ve learned back to work,” she says. “It’s wonderful to be able to discuss ideas with people who don’t necessarily report to me.”

Meanwhile Slivka’s co-workers noticed a positive change in her right away. “I have a different set of eyes and I analyze things a little bit differently,” she says. “My boss said he can tell a difference in the way I look at things and in the comments I’ve made.”

The degree is perfectly suited for students like the four from Huntsville, says Sarah Fairbank, MM Health Care Program Director. “I tell prospective students we are designed for two kinds of people,” she says. “It’s for people who have been ‘siloed,’ who are working in a narrow field with lots of specialization. That might be a contracts person, a supply chain specialist, someone from the finance side or a physician with a narrow specialization in medicine. These are people who need a broader view of health care, along with management tools.

“The other type of person we see is someone who is coming into the health care field with a generally technical background—an operations specialist or IT specialist who has worked in other industries and is now in health care.”

Students range in age and experience. Some are young professionals preparing for a future in health care, while others are midcareer and ready to move up the ladder. There are also physicians who later in their careers want to use their accumulated wisdom in new and different ways.

A key element of the curriculum is personal coaching since the students are often transforming their own roles within their organizations. “The coaching was phenomenal,” Powers says. “It has helped me get on track and be more productive. I’m a very organized person, but I’ve learned that I need to devote specific time to reading articles and delegating.”

Sarah Fairbank

The average time commitment outside the classroom for the MM Health Care degree is at least 10 to 15 hours per week, though the initial learning curve may be steep at first for students who have been out of school for many years. In addition to these hours, the Huntsville students had to shoulder the extra commitment of traveling further than most students—approximately 100 miles each way. The routine is intense, Rhoades admits, but still very doable. “It’s such an achievable goal, so it takes the pain out of the travel,” she says.

Rhoades says it helped that members of the Owen community were standing ready to ensure their success throughout the whole process. This was no more evident than when deadly tornadoes ripped through northern Alabama last April. Staff, faculty and fellow students rallied to assist the Huntsville team and their communities.

“The support has been incredible. They pay such close attention to the needs of the students,” Rhoades says. “We in Huntsville have especially realized that. In bad weather, when it became clear we couldn’t get there, they quickly rounded the wagons and got some technology together. We had a live class by tapping in electronically.”

Breaking New Ground

As professionals make their way up the ladder, Fairbank explains that the challenge becomes, “How do you get people to look at you differently?” An integral part of fast-tracking that change in perception is another key part of the curriculum: the capstone project, an eight-month consulting engagement during which a team, usually of four people, takes on an institutional problem as if they were professional consultants. Through the project, the students are able to demonstrate immediate economic value by tackling important organizational issues.

“We seek to ensure that everyone coming out of our program projects a dramatically enhanced identity within their organization,” says Frisse, who oversees the teams’ work.

For the Huntsville team, their capstone project’s focus was evaluating the potential impact of a brand-new hospital in Madison, Ala., a community outside of Huntsville. The Madison area is growing, vibrant and affluent, with an average household income of $90,000. Many residents are scientists and engineers working for NASA, the defense industry or technical firms.

The group concentrated specifically on how to position obstetrics services in Madison. “This is the first hospital to be built in Alabama in many years,” Rhoades says. “Not very many people get to participate in building a hospital from scratch. But we also had to consider that we belong to a hospital system with other hospitals that we need to be concerned about. It’s not all about us. This is about creating the best business for everyone so that we’re all successful.”

The Huntsville system first built a wellness center, physician office building and urgent care center on the property in Madison. The success of those ventures demonstrated the viability of a hospital. “Owen helps you think strategically, and that’s what [the new hospital in] Madison is all about,” Rhoades says. “Many years ago, the strategic planning began with a purchase of land. It began with a vision and a goal. Everything you gain from Owen classes and programs ties into that kind of scenario. I put it into practice every day in my job.”

For Powers, the capstone project was particularly interesting since the new hospital in Madison had the potential to impact her facility, Athens Limestone Hospital, the most. While some factors will remain unknown until the facility is up and running next year, Powers says the planning process helped alleviate undue concern about the new hospital’s potential impact and shifted the focus to the strategic side.

Richardson adds that building obstetrics services around the strategic mission of each of the hospitals makes sense, since the birth of a child often provides a family’s first exposure to a medical facility. “We have to get it right so that the mother and the child have the absolute best experience,” he says. “And we have to make sure that we design it so we don’t hurt the other hospitals. We may eventually find that it’s best to provide those services primarily at one hospital. It’s a very delicate situation, and we have to get it right.”

Besides generating practical ideas for Huntsville Hospital to implement, the project also helped the students learn how to work together as a team. “The strength of our team is that we’re coming at the project with different knowledge skill sets. We all come from diverse areas that are all important to the outcome we seek,” Richardson says. “I love writing and doing the research and pulling things together. Kelli has a global perspective on what other organizations are thinking. Carol looks at everything from the financial standpoint: What’s the bottom line impact from the standpoint of income statements or the balance sheet? Faith brings the whole physician perspective to the table.

“Now I appreciate my team members at a whole different level.”

Richardson also appreciates just how far he himself has come during a year’s time. It has been a journey marked not so much by miles logged on the odometer or hours in the classroom, but rather by immeasurable moments of progress. In the end, the MM Health Care program delivered him closer to his lifelong goals and gave him something that should pay dividends the rest of his career—confidence.

“I know I’m ready for my next project,” he says, “no matter where or what that’s going to be.”

Executive MBA Class of 2011

This past spring Bruce Brockenborough, EMBA’01, President and CEO of Hannan Supply Co., issued a challenge to the Executive MBA Class of 2011. If they would raise at least $145,000 for their class gift with 100 percent participation, he would pledge money of his own to help launch much-needed scholarships within the EMBA program. The Class of 2011 responded by raising a total of $150,000—the largest amount ever raised by an EMBA class—with every student contributing. Brockenborough followed through as well, and the combined gifts established both the Brockenborough Family Scholarship and EMBA 2011 Scholarship funds, which will provide financial support for deserving EMBA students.

Knight (left) and Bosslet will go just about anywhere to get the interview they’re after.

How did you two end up working together? And what’s the story with this name “Blark!” that follows you everywhere?

Blake: “Blark!” started as an inside joke. It’s a play on our two names.

Clark: In case that wasn’t obvious.

Blake: We flash it at the end of each video as a production credit in the Owen Podcast Series. We didn’t think anyone would notice, but as our first year progressed, our classmates co-opted “Blark!” and began referring to us as a single entity. So I guess at least a few of them had been watching.

Clark: We suspect they started using it because they hadn’t bothered to learn our individual names yet.

Blake: Well, to be fair, we didn’t exactly make it easy for people to differentiate us. We’re both from Texas and we both majored in marketing as undergrads at Texas A&M. We both joined OwenBloggers at the beginning of our first year and started working for the school’s Marketing and Communications office as social media consultants. We both have dark glasses and wives who are arguably out of our leagues. People act like we must be lifelong friends, but one year ago we’d never met.

Clark: Well, that’s not exactly true. As we’ve recently pieced together, we apparently met at a house party as undergrads, just after Blake started dating his future wife, Kristi, who happened to have a couple of classes with me. More than likely, we were loitering around the keg and talking about music, since Blake was in a popular local band at the time and I secretly idolize musicians. And that was it.

Blake: After the chance encounter, we went our separate ways. I had a pretty unique hybrid background of marketing and design, and so I worked for two successful startups in Dallas as their one-man marketing machine. Clark … I don’t even know why he got a marketing degree.

Clark: Yeah, I put it to good use. I started in state and local tax at KPMG and then joined the internal strategy group at Texas Children’s Hospital.

Blake: But Owen brought us back together.

Clark: It was very much like the movie Serendipity.

Blake: Strikingly similar. My wife recognized Clark’s name on the list of admitted students, which prompted an email, which prompted calls, which prompted meeting up before school even started.

Clark: All of which prompted lots and lots of scheming. We definitely both have an innate drive to create stuff when we think there’s a need. Or, in the parlance of our peers, to “blue sky” it.

So how did the Owen Podcast Series come together?

Blake: Early on, we agreed that Owen, and just about every other business school we visited, could have a more robust media library. This would allow prospective students to feel like they really know the school’s people and culture during their search process, even before visiting the campus to experience it firsthand.

Clark: This notion was the seed of the Owen Podcast Series, which built upon previous Owen podcasts by adding an interview format and bringing in an eclectic mix of guests, ranging from faculty members to community leaders to local business owners. The goal is to showcase everything that makes Owen and the surrounding community unique.

Blake: Prospective students don’t just care about the curriculum and pedigree of the schools they seek out. That’s important, but they also care about the culture and social activities outside the walls of academia. It’s a package deal, something we were keenly aware of after talking our wives into dropping everything and moving to Nashville. Based on that, we knew that prospective students and their partners want to know they’ll have some fun during the whole grad school experience.

Clark: The city of Nashville has a strong creative class and a strong entrepreneurial spirit. It’s a lot more than a country music scene, or even a health care scene, although it obviously has all of those things, too. We really believe the city is a key part of the Owen value proposition.

Blake: We found the school to be incredibly fertile ground for organic, student-led innovation. Before stepping foot in a classroom, we brought our podcast idea to the admissions team, who saw it as a great marketing tool, not only for prospective students but the Owen community at large. We were then put in touch with Yvonne Martin-Kidd, Executive Director of Marketing and Communications.

And how did the idea go over?

Clark: We were two anonymous, overeager students. They could have easily scoffed. But after presenting our vision, the response was overwhelmingly supportive.

Blake: It was, “What do you need to get going? Cameras? We have HD, Flip, handhelds and studio lights. Microphones? We have lapels and handhelds, all wireless. Anything you need is at your disposal whenever you need them. And, by the way, once you get going we can give you a prominent spot on the new website we’re creating for Owen and possibly include featured podcasts in our newsletters.”

Clark: It was pretty unexpected. They not only signed off on the project, but they wanted to become actively supportive in its success. Blake and I both came from an undergraduate school with almost 50,000 students. Texas A&M has a strong culture of student involvement, but there’s a lot of red tape. In this case, the speed of approval and level of encouragement was incredibly refreshing.

How did you become affiliated with OwenBloggers?

Clark: OwenBloggers has always prided itself in leaving off the veneer, so to speak. It’s far less engaging as a member of an audience when you feel like you’re being pitched to. Everyone in this era has built up a natural layer of skepticism, and when you feel a sales pitch coming on, you immediately put up a mental barrier. We wanted the podcasts to avoid that sheen. It needed a home within the constellation of online touch points at Owen, and it found a kindred spirit in OwenBloggers.

Blake: We were both familiar with the site after visiting it many times as prospective students, and we were excited about the opportunity to partner with something that had a built-in audience and an established brand. The site was flush with material and had a broad international readership, but had outgrown the blogging platform it was created on. We met with the current and past leadership of the site, who were already tossing around the idea of moving the site onto WordPress (a popular blog publishing platform).

So you do some programming as well?

Clark: This was all in Blake’s sweet spot. When we found out about the WordPress initiative, I basically volunteered Blake’s Web design and programming expertise to build the new site. The only thing I more willingly offer than my own time is someone else’s.

Blake: We had the opportunity to combine the veteran OwenBloggers site and the yet-to-be-tested Owen Podcast Series into a multimedia conglomerate, the likes of which had never been seen before … at least in graduate student-led media circles … in the southeast United States … to our knowledge.

Clark: We are basically young Rupert Murdochs. I hope he doesn’t do anything stupid before this article appears.

And all of this is in your first month or so as students?

Clark: I think it sounds more ambitious after the fact. At the time, we just wanted to create content. We were excited about starting the next chapter in our lives and about having access to some really great minds. Honestly, the podcast series was mostly an excuse to reach out to interesting people and pepper them with questions, all under the guise of content creation.

How do you decide on which guests to interview?

Blake: We started looking for guests here at Owen, which is ripe with passionate personalities and big thinkers. We wanted to provide a relaxed, intimate look into people whom incoming students would be interacting with their first year. Faculty such as Michael Burcham, Lecturer of Entrepreneurship; Dave Owens, Professor of the Practice of Management and Innovation; and Larry Van Horn, Associate Professor of Management; as well as Read McNamara, Executive Director of the Career Management Center, all sat down with us to talk about what drives them personally and professionally. While we touch on the requisite questions regarding their roles at Owen, we’re really looking to establish the people behind the message and create a real experience for the viewer. Simple lighting, one camera shot, natural settings, and, with the exception of raucous bird squawks and ambulance noises, very few edits.

Clark: In one of our first episodes, Bart Victor, the Cal Turner Professor of Moral Leadership, mentions the Carnegie Bargain, which is the mindset that one must first do well financially in order to have the means and freedom to do good philanthropically. And then we talked about the misplaced focus of many organizations on fixing the suffering of poverty instead of alleviating the poverty itself, which is a key tenant in the Project Pyramid courses here at Vanderbilt. It was, at least in my mind, genuinely interesting stuff, and I think that’s when we realized the true potential within the series. Our litmus test has always been: If I’m a prospective student and I stumble upon this, is this compelling? Does it flesh out my opinion of the school? And if the answer is yes, it has some value.

Blake: I think people really connect with genuine passion. It comes through the screen and grabs you as a viewer. When you see a professor speak passionately about something, it helps you uncover what’s behind the syllabus and understand why Owen students are regarded not only for their spreadsheets but also their convictions.

Clark: Once we had our sea legs, we started looking into the community to find local business leaders who are focused on making Nashville unique. No one would call us shy, but it was still daunting to essentially cold call someone to ask them to be on a podcast that’s still more of an idea than a product.

Blake: As it turns out, we had an ace up our sleeve: being students. People are definitely more receptive to the idea of sitting down with students, especially if they can tell you’ve done your homework and know their craft a bit.

Clark: Blake and I have a certain aesthetic, and that aesthetic is good beer and good music.
Blake: We reached out to local companies like Yazoo Brewery, Third Man Records (Jack White’s label) and Hatch Show Prints and asked for an hour of time with the owners. These are all small shops, so their time is valuable, and they’re not hurting for media coverage, not that we even qualify. But when we prefaced the request with “I’m an MBA student from Vanderbilt,” they gladly opened their doors to us.

Clark: I think that’s a testament to two things—the cachet of the Vanderbilt name and the tremendous sense of community here in Nashville.

Blake: At the end of the day, we really enjoy it. We meet incredible people and talk about great ideas. When our podcast with Ben Blackwell, Director of Operations of Third Man Records, was picked up by the local media, there was an admitted sense of pride in knowing our efforts helped raise the local profile of the school.

So what’s next for “Blark!”?

Clark: The hardest part is not coming up with the ideas, or even initially bringing them to fruition. That’s easy because it’s thrilling and somewhat finite. The hard part is sustaining something once the newness and the sense of accomplishment has worn off a bit. So a big focus for us this year is making sure the podcast series and the website are sustainable. The quick turnover at business schools can kill a lot of good ideas because capturing that institutional knowledge is so challenging. But we are blessed to have some really great peers at Owen right now. There’s a palpable eagerness among the student body to make Owen a better place while we’re here.

Blake: We recognize that this is a unique point in our lives. We have a lot of precious commodities right now: time, resources, administrative champions and lots and lots of smart people around us. It’s a recipe for doing some really fun stuff that’s not only personally rewarding but also reflects well upon the school.

Cheryl Chunn has been named Associate Dean of Development and Alumni Relations. She previously worked as Director of Development, Departmental Programs, for Vanderbilt University Medical Center.

Mark Cohen, Professor of Management and Law, has rejoined the Owen School following a leave of absence as Vice President for Research at Resources for the Future, a noted environmental think tank in Washington, D.C.

Brian McCann, MBA’04, Assistant Professor of Strategic Management, has become a permanent, full-time faculty member.

Fond Farewells

Bob Blanning, Professor of Information Technology, Emeritus, was among 16 retiring Vanderbilt faculty members honored during Commencement May 13.

Tricia Carswell, Associate Dean of Development and Alumni Relations, has stepped down to become Executive Director of Principal Gifts at her alma mater, Furman University.

Jon Lehman, Associate Dean of Students, has stepped down to become CEO of PAX Scientific, an engineering research and product design firm, but will continue to teach at Owen.

Ron Masulis, the Frank K. Houston Professor of Finance, who was away on a leave of absence to the University of New South Wales, has elected to join that university on a permanent basis as the Scientia Professor of Finance.

Mike Shor, Assistant Professor of Management, has accepted an opportunity to become Assistant Professor of Economics at the University of Connecticut, where his wife is also a faculty member.

This year was no exception. Brett Sweet, Vice Chancellor and Chief Financial Officer at Vanderbilt, chaired presentations on regulating risky banks, while Margaret Blair, the Milton R. Underwood Chair in Free Enterprise at Vanderbilt Law School, led a session about the federal rule-making process.

The primary focus of this year’s FMRC conference, held May 5–6, centered on implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Almost a year after the bill was signed, federal regulators continue to draft new rules overseeing hundreds of trillions of dollars’ worth of activity that touches everything from the credit-default swaps that played a role in the 2008 financial crisis to overhauling Fannie Mae and Freddie Mac. In fact, the task of implementing the law has proven so massive that regulators have pushed many of its deadlines back six months to Dec. 31, 2011.

Even as regulators finish their work, however, many questions remain (including from those within the government) about the law’s ultimate impact.

Mortgage Reform

Edward DeMarco talked about mortgage reform in his keynote speech at the FMRC conference.

Regarding home mortgages, Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), said in his FMRC keynote speech that keeping Fannie and Freddie in an indefinite state of conservatorship—which has stretched on for more than three years—poses risks to an already fragile sector. Total taxpayer support of the companies could climb to $363 billion by 2013, according to FHFA estimates, and so far none of the reform proposals put forth by Congress and the White House have gained much political traction.

“The only thing Congress can agree on is not renewing their original charters,” he said.

Whatever plan does finally emerge for Fannie and Freddie, DeMarco indicated that there are at least three elements that any framework must include:

• Uniform mortgage standards: From collecting borrower data to developing guidelines for home appraisals, he said the industry needs consistency and transparency throughout the life of a loan. Without these elements, the world of private capital won’t be able to price and evaluate risk correctly.
• Diversity of product offerings: Lenders shouldn’t lock themselves into offering only traditional 30-year fixed-rate mortgages just because data standardization is needed. “This is a big country with lots of people in many different situations,” he said. “The mortgage market of the future really needs to be not just liquid and stable, but it needs to have an appropriate diversity of offerings.”
• Clarity about the role of the taxpayer: To properly calibrate how risk is assigned, priced and managed, DeMarco said it’s imperative that investors fully understand the role of the taxpayer in any future mortgage finance system.

Derivatives Oversight

There’s a climactic scene in Michael Lewis’ bestselling book The Big Short in which Dr. Michael Burry, the neurologist-turned-investor, finally sees his $1.9 billion bet against subprime mortgages start to pay off—that is, until he contacts his counterparties and tries to collect.

As it happened, the very banks from which Burry purchased the products that, in theory, should have been making him rich were also the same institutions responsible for pricing his investments.

“It was determined by Goldman Sachs and Bank of America and Morgan Stanley, who decided each day whether Mike Burry’s credit-default swaps had made or lost money,” Lewis wrote.

Under the Dodd-Frank Act, many of those kinds of privately traded derivatives—worth as much as $600 trillion—will now be transparently priced and exchanged through a central clearinghouse. In addition, the Securities and Exchange Commission (SEC) will split oversight of these financial instruments with the Commodity Futures Trading Commission (CFTC).

Joanne Moffic-Silver, Executive Vice President and General Counsel for the Chicago Board of Options Exchange, told FRMC conference participants that her company is interested to see how the two federal overseers handle these new regulations.

“One question with the Dodd-Frank Act is: Will having two agencies split jurisdiction over functionally equivalent products work?” Moffic-Silver said. “Ideally, and this is my personal opinion, there should be little or no difference between the SEC and CFTC on swaps rules.”

As written in the new law, the SEC will handle swaps that are backed by securities like a single or narrow group of stocks; the CFTC will manage the rest, including 22 listed categories that include interest-rate, credit-default and currency swaps.

But Moffic-Silver said Dodd-Frank includes a number of possible exceptions that would exclude various swaps from being traded through a clearinghouse. In addition, the new law allows for the creation of a new “Swap Execution Facility” (SEF) that would be an alternative to listing on an exchange. Current proposals from both the CFTC and SEC differ on some of the specifics of how these SEFs would operate, Moffic-Silver pointed out.

“The rule-making process has been interesting. The SEC and CFTC do talk, they do meet, and they have a current memorandum of understanding where they are supposed to coordinate regulation of similar products,” Moffic-Silver said. “But the proposals have differed in some very important areas.”

‘Bail-ins’ instead of Bailouts

On Sept. 15, 2008, the world awoke to what Andrew Ross Sorkin, writing in The New York Times, called “one of the most dramatic days in Wall Street’s history.”

The storied brokerage firm Merrill Lynch was sold for $50 billion, just half of what it had been worth the previous year; and after failing to find a buyer, Lehman Brothers filed the largest bankruptcy on record, culminating in a painful $150 billion liquidation.

After those catastrophic events, Congress approved a $700 billion bailout several weeks later to help banks unload their “toxic” mortgage-related assets to prevent further shocks. Now, instead of once again using taxpayer money to help prevent a contagion risk that could bring down the banking world, there’s discussion about designing a “bail-in” mechanism.

Wilson Ervin, Managing Director at Credit Suisse, explained in a presentation at the FMRC conference that a “bail-in” would give regulatory officials the authority to impose a resolution designed like a prepackaged bankruptcy. “Think of a Chapter 11 bankruptcy on steroids,” he said.

“When an airline goes out of business, air traffic control doesn’t go haywire. When a phone company goes down, we can still make phone calls,” Ervin said. “But when banks go down, it’s different.”

Using the case of Lehman Brothers as an example, Ervin said by writing down assets and converting a portion of the debt to new equity, the bank could have preserved a capital base of more than $40 million, giving it some hope to raise additional investment from other financial services firms.

“The process would not be pretty, but overall investors should be relieved by the result,” Ervin wrote in an Economist essay he co-authored on the subject. “In [the Lehman] example the bail-in would have saved them over $100 billion in aggregate, and everybody—other than short-sellers in Lehman—would have been better off than today.”

New Vanderbilt Research

In addition to the speakers from government and private industry, several members of the Owen faculty presented new research, including Bob Whaley, the Valere Blair Potter Professor of Management, who discussed his collaboration with Jacob Sagi, the Vanderbilt Financial Markets Research Center Associate Professor of Finance, in launching NASDAQ’s Alpha Indexes. Also Nick Bollen, the E. Bronson Ingram Professor of Finance, shared results from a recent paper investigating hedge fund investment strategies, while Hans Stoll, the Anne Marie and Thomas B. Walker Jr. Professor of Finance and Director of the FMRC, presented new research with Thomas Ho, the FMRC Research Professor of Finance, examining the interaction between financial markets and regulations.

When looking at most world maps, we take for granted our points of reference. North is up, south is down, and the U.S. is in the top left corner, just as it was when we first learned geography in grade school. Not everyone, though, subscribes to this point of view.

For decades, a group of trailblazing mapmakers has tried changing the world as we know it by changing how we see it. Their so-called reversed maps depict what seems like an upside-down world, where countries in the Southern Hemisphere have supplanted their neighbors to the north. The underlying message is that the perch from which we view the world is an arbitrary one. North is still north, of course, but that doesn’t necessarily mean that it should be at the top of the map. Nor should countries at the top be considered “above” everyone else—either literally or figuratively.

After graduating from college, I learned this firsthand, but without the aid of a reversed map. Torn over my job prospects (or lack thereof), I did what many 22-year-olds with wanderlust do: pick a place on the globe and go. Joined by a couple of friends, I set out for Chile, a country I knew very little about, with the intention of staying a year. My thought was that I would teach English to pay the bills and travel around South America at every opportunity, all while brushing up on my Spanish.

I ended up doing all of these things, but the experience as a whole left a much deeper impression on me than I ever could have imagined. During the course of the year, I made lifelong friends and gained a lasting appreciation for the culture. I also came to realize that my preconceived notions of what it means to be American were limited at best. In truth, our New World neighbors have rightful claim to that name as well, for in spite of our differences, we share a corner of the world with a common pioneering spirit.

Of all the discoveries I made that year abroad, I probably learned the most about myself. It’s ironic that I had to travel halfway around the globe to get to know the person in the mirror better, but that’s exactly what happened. Finding a new vantage point from which to view the world afforded me a much better understanding of my place in it.

I imagine the inaugural class of the new Americas MBA for Executives program, which is discussed in this issue’s cover story, will come to a similar realization. One of the program’s main selling points is the exposure to business practices in Brazil, Mexico and Canada, but the unspoken value is the personal journey that will accompany those experiences. By immersing themselves in those cultures, the students will be letting go of the familiar and looking at the world—and themselves—with a whole new perspective.

In other words, they’ll be doing those trailblazing mapmakers proud.

Innovation in education, much like in business, originates from intellectual curiosity—from asking “Why not?” and “What if?” in a structured and often empirical way. At Owen, our innovation is sparked by a business world that is always evolving. This can be seen in the unique and powerful ways in which our faculty’s research addresses specific needs brought to us by the business community. It’s also evident in the program creation that has taken place at Owen during the past six years.

Programs like the MS Finance, Master of Accountancy and Master of Management in Health Care are all products of resource- and market-based opportunities, creative thought and a willingness to act. Likewise the new Americas MBA for Executives, which is the topic of this issue’s cover story, arose from the need to provide students, particularly those who are seeking assignments in the Western Hemisphere, with a better understanding of global business.

By building innovative programs such as these, we’re able to expand our brand and product offering, while also attracting applicants who are valued by the employment market both in good economic times and bad. Years of experience and observation have taught me that the only real sustainable competitive advantage in business is to surround yourself with the best and brightest. Education is no different. A school like ours can maintain a successful path only if it’s able to attract, hire and matriculate exceptionally talented individuals.

The programs you read about in this issue of Vanderbilt Business illustrate the great strides we’ve made, but there’s still much work to be done. To compete with other schools, we must find the resources to continue bringing the best students and faculty to Owen. Your support is the key to our success, and I hope that we can continue counting on it in the months and years to come.

Respectfully yours,

James W. Bradford
Dean, Vanderbilt Owen Graduate School of Management
Ralph Owen Professor of Management

Bappa Mukherji is the CEO of Gics Foods, which packages food into convenient microwaveable retort pouches.

Ashoke “Bappa” Mukherji is no stranger to pressure. Soon after graduating from Vanderbilt with both an MBA and a law degree, he was thrust into one of the more challenging roles a budding young attorney could ask for—sitting second chair in a first-degree murder trial. It was his first trial ever.

When asked about the stress he was under, he laughs, “It could have been worse. At least I wasn’t the one on trial.”

Mukherji spent the ensuing years at a Nashville law firm, where he concentrated mostly on mergers and acquisitions. Advising clients on these deals suited his Owen School background, but he always wondered what it would be like to “move to the other side of the table,” as he puts it, and go into business for himself.

In 1997, with the help of two business partners, Mukherji did just that, launching a startup that manufactured recycled toner cartridges. That idea eventually blossomed into Guy Brown Products, a Brentwood, Tenn.-based office products distributor that had revenue close to $200 million in 2010. Mukherji served as CEO of the company until he stepped down last fall.

“At Guy Brown we differentiated ourselves from competitors by focusing exclusively on selling to large, geographically dispersed organizations and doing it better than anyone else,” he says. “It’s similar to what I’m doing today—studying the market and figuring out where our company has room to operate.”

The company he’s referring to is Gics Foods, a food packaging business in Greenville, S.C. Appropriately enough, this latest venture is all about pressure—albeit a different sort from what Mukherji is used to.

Under his guidance as CEO, Gics packages food into retort pouches, which are plastic laminate and metal foil containers that can withstand the high temperature and pressure used to cook what’s inside them. Convenient microwaveable bags of rice are just one example of this growing technology that’s revolutionizing not only how food is preserved but also how it’s prepared.

“We’re the first company focused solely on retort packaging,” he says. “That’s what makes us stand out.”

That, and of course, a bit of pressure.

Craig Lewis

Mary Schapiro, Chairman of the Securities and Exchange Commission, named Owen professor Craig Lewis the SEC’s new Chief Economist and Director of the Division of Risk, Strategy and Financial Innovation (Risk Fin) this past May. Lewis, the Madison S. Wigginton Professor of Management in Finance, had been working on sabbatical at the SEC since January 2010.

“I am honored that Chairman Shapiro has offered me the opportunity to lead the division and the SEC’s economists at this critical juncture,” Lewis says. “I look forward to fostering durable new analytic models that will promote efficient and effective work throughout the agency, from rule-writing through enforcement.”

Lewis joined the Owen faculty in 1986 and has since been widely published on a range of financial issues. His interests and current research topics include stock and futures markets, margin adequacy, corporate earnings management, corporate financial policy, executive compensation, selective disclosure, and herd behavior by equity analysts.

“This is a great opportunity for Craig, a highly respected professor and researcher here at Vanderbilt who’s deeply admired by his students,” says Jim Bradford, Dean of the Owen School. “His appointment as Chief Economist at the SEC exemplifies a long tradition of high-caliber, real-world work that has earned the finance faculty here a place of prestige among business schools.”

Risk Fin, created by the SEC in September 2009 to help identify market risks and trends in the wake of the financial crisis, was the SEC’s first new division in 37 years. It provides sophisticated, interdisciplinary analysis across the entire spectrum of SEC activities, including policymaking, rulemaking, enforcement and examinations. In addition to this role as an agency think tank, Risk Fin was created to help break down silos that compartmentalized the SEC’s institutional expertise.

Lewis’ position with the SEC is a two-year appointment. He is currently on a leave of absence from Vanderbilt.

A team of students from the Owen School placed third in an inaugural health service case competition held at Northwestern University April 29–30. The 2011 Health Service Case Competition was the first of what the recently formed Business School Alliance for Health Care Management intends to become an annual event. Sponsored by DaVita, a leading provider of kidney care in the U.S., teams of three students each developed strategies to take on a real-world business case related to health care management.

Vanderbilt’s team included Dr. Jennifer Rymer, BS’05, MBA’11, MD’11; Avery Fisher, MBA’11; and Jonathan Cook, an MBA candidate for 2012. The team received a $1,000 award for finishing third behind the University of California, Berkeley, and Northwestern University.

Patrick Slay, Senior Associate Director and Director of Coaching, has enjoyed two stints at the Owen School’s Career Management Center (CMC), first in 1999 and then again starting in 2008. A national certified counselor, he works primarily with consulting, general management, operations and strategy MBA students, as well as MSF students. Among his responsibilities is organizing the school’s annual mock interview day each fall.

Q: What is mock interview day? When and how did it originate?

Patrick Slay

A: It’s an annual event that started in fall 2008. The CMC saw both the need to provide job interview practice to Owen students on a large scale and the opportunity to engage Owen alumni in giving back to the school. Each student gets 45 minutes to practice interviewing with alumni, but there’s also time to network a bit and learn more about the roles they might pursue. In all, 35 to 40 alumni representing different industries and job functions come back for the event, and about half are from outside the greater Nashville area.

Q: What’s one piece of advice you give students looking to improve their interviewing skills?

A: Practice, practice, practice. No matter how good you think you are at interviews, practice is still essential for being able to walk into a room and sell yourself for a job. We remind students that the person who gets the offer is not always the most qualified, but rather the person who best articulates how he or she can do the job at hand.

Q: What have you learned from being part of mock interview day?

A: That everyone seems to enjoy it. It’s great to see the energy in the building on the day of the event. Alumni like being back, catching up with old friends and helping current students. Students appreciate the time alumni put into it and the great advice they receive. There’s not a downside to the event—except maybe it’s not held often enough!

Q: How can alumni get involved in the process?

A: We solicit help from alumni based on the information we pull from VUconnect. I always remind alumni to keep their profile updated online. If they’re interested in helping with this event or in some other way, they can always contact the CMC directly and we’ll figure out how to get them involved.

Bob Whaley, the Valere Blair Potter Professor of Management, and Jacob Sagi, the Vanderbilt Financial Markets Research Center Associate Professor of Finance, rang the NASDAQ OMX opening bell in New York April 19 to celebrate the start of options trading on a new group of indexes the pair developed. Called Alpha Indexes, the new tools are designed to help investors measure performance between individual stocks and benchmark exchange-traded funds. Watch CNBC coverage of the event.

Responding to an increased demand for students able to handle functions such as assessing mark-to-model values, measuring brand goodwill and pricing acquisition targets, the new program draws on some of Owen’s core academic strengths.

“The master of accountancy program itself has been a great success story, and this next step is a logical one to take,” says Dean Jim Bradford. “This innovative new course of study will address the changing world of accounting as it relates to valuing assets and risk.”

Under the guidance of Karl Hackenbrack, Associate Professor of Accounting, Faculty Director of the MAcc Program, and Associate Dean of Evaluation and Program Development, the valuation track will graduate its first class in spring 2013. The full-time program runs 12 months and includes preparation for two of three levels of the chartered financial analyst (CFA) exams, as well as the certified public accountant (CPA) exam. Students will have the opportunity to take all three tests while in the program.

“All valuation students aspire to launch their careers with an international public accounting firm in service lines that deal primarily with business modeling, transactions and audit support,” Hackenbrack says. “This program really is at the nexus of finance and accounting. To succeed in a valuation service line, the professional must understand accounting rules and the finance behind those rules.”

Successful applicants must have solid quantitative skills, but also be well-equipped to handle client-facing roles, Hackenbrack adds.

In 2010 Bloomberg Businessweek’s recruiter survey ranked Owen’s accounting program fifth among U.S. MBA programs, ahead of institutions such as Harvard Business School and the University of Pennsylvania’s Wharton School. This year’s 28-person MAcc class had a 100-percent job placement rate, in part due to the relationships formed with partner firms Deloitte, Ernst and Young, Grant Thornton, KPMG and PricewaterhouseCoopers.

Frank Bumstead at the FBMM office in Nashville

Frank Bumstead, MBM’72, admits he really didn’t know what to expect when he enrolled in Vanderbilt’s Graduate School of Management in 1970, soon after finishing a tour in Vietnam as a mine warfare officer. The school, which had yet to adopt the Owen name, was young then and trying to establish its identity, much like Bumstead himself. Yet by the time the Dallas native graduated two years later, he had a strong appreciation for what the school had taught him.

“The most important thing the Owen School teaches you is how to learn,” he says. “It’s important to keep an open mind and commit to being a lifelong learner because the world changes. Two years from now, things won’t be the way they are today.”

That lesson has proven particularly valuable in Bumstead’s career. While an Owen student, he had a job with then Tennessee Gov. Winfield Dunn’s administration and thought that he might continue working in state government. Instead he ended up going in a very different direction: Since 1990, Bumstead has been a Principal with Flood, Bumstead, McCready & McCarthy (FBMM), a financial management firm representing clients in the music industry. Among those on the roster are country artists Keith Urban, Taylor Swift and Rascal Flatts, as well as acts like The Black Keys, Kings of Leon and Danger Mouse.

FBMM, which has offices in both Nashville and New York, is one of the few firms to offer clients what is known as tour accounting. “The money is in touring today,” Bumstead explains. “Years ago, artists toured so that they could sell records. Today they try to sell records so they can tour. Our job is to make sure that every nickel owed our clients actually gets to them and that their expenses are only the ones we and/or the clients authorized.”

Looking back on a career that has spanned 40 years, Bumstead can point to many things that have played a hand in his success, from education to effective business partnerships. Yet if he had to narrow it to one reason, he’d say it’s something he learned early on, growing up in a low-income family.

“I never felt entitled,” he says. “I always felt challenged and threatened. I felt like I had to work a little bit harder and learn a little bit more and be more attentive because I’m certainly not the sharpest knife in the drawer.”

Fraser, pictured here at Band-e Amir Lake in Afghanistan, spent five years in the country managing the World Bank’s energy program and leading donor coordination efforts for the energy sector.

When Julie Fraser arrived in Kabul, Afghanistan, in January 2002, it was clear that the mission at hand would be unlike any she’d had before. The Kabul airport had been one of the primary targets of the U.S. invasion three months earlier, and the widespread destruction was evident as soon as she stepped off the plane.

“There were parts of bombed-out aircraft littering the tarmac—a fuselage here, a tail piece there—and all the windows in the airport had been blown out,” Fraser says. “We also were advised not to wander off the tarmac since the airport was heavily mined.”

At the time, Fraser was a 10-year veteran with the World Bank, an international financial organization dedicated to fighting poverty in developing countries worldwide. She was used to challenging assignments in faraway places, but the mission to Afghanistan was her first in a war-torn area. As part of the initial joint World Bank and International Monetary Fund mission to help the country rebuild, she and her colleagues operated under the tight security umbrella of the United Nations. In the early going, there were only 83 UN international staff, including Fraser, allowed in the country at any one time—because 83 was the maximum number of passengers the plane could hold if they had to be evacuated at a moment’s notice.

All risks aside, Fraser looks back with fondness on the five years she ended up spending in Afghanistan. And she feels similarly about her other assignments as well, including her current stint as Senior Financial Analyst with the Southeast Asia Sustainable Development Unit in Bangkok. Her 20-year career with the World Bank—the only employer she has had since graduating from Owen in 1991—is a testament to the pleasure she takes in her job.

Fraser attributes this long tenure to the solid finance education she received at Vanderbilt. She says it has enabled her to enjoy a variety of assignments and grow as an employee. “Some positions at the World Bank are sector-specific, like being a road engineer or an agricultural economist,” she says. “But with a finance background, you can work across a wide spectrum and have an interesting career.”

Fraser also credits her colleagues for making the World Bank such a fascinating place to work. “They are smart, intellectually curious and deeply committed to the bank’s mission—all of which makes it a stimulating environment,” she says. “They also come from all over the world. It’s not unusual to have a team dinner and for each person to be from a different country.”

Today’s World Bank, comprising the International Bank for Reconstruction and Development and the International Development Association, is much larger in size and scope than the original institution, which was established in 1944 to assist with post-World War II reconstruction. In all, there are approximately 10,000 employees in more than 100 offices worldwide. These offices work primarily with governments to provide low-interest loans, interest-free credits and grants for investments in education, health, public administration, infrastructure, agriculture, financial and private sector development, and environmental and natural resource management.

Fraser’s earliest World Bank assignments were with the Central Transport Unit working on railway projects in China and then Pakistan. During the early ’90s, the governments of both countries were considering reforming their respective railway systems, and she had the task of creating financial models showing the benefits of introducing private sector participation. The reform movements in both countries, however, made little headway. In the case of Pakistan, then Prime Minister Nawaz Sharif ultimately decided to appoint an army general to run the railway instead—a disappointing result after years of effort by Fraser and her colleagues.

Such experiences are not uncommon in World Bank work, Fraser explains. Projects often can be slowed to a standstill by tangles of red tape and weak government capacity. “Dealing with the weak capacity in some of these foreign governments is probably the toughest part of my job,” she says. “Many times when you’re trying to get something done that should be relatively easy, you end up going from pillar to post.”

Fraser, however, is quick to add that a successful mission more than makes up for the frustrating moments along the way. “The best part of all,” she says, “is being able to go into the field and see the people who are benefiting from our projects.” As evidence, she points to her recent work with rural electrification in Cambodia and Laos. In the case of the latter, a project financed by the World Bank has dramatically increased Laotians’ access to electricity—from 16 percent of the population in 1995 to approximately 70 percent today.

“It’s so rewarding to go into a rural village and see families who have electricity for the first time in their lives,” she says. “They no longer have to read by kerosene, and their kids are able to study at night.”

Yet of all the missions Fraser has undertaken, she says none has been as edifying as the one to Afghanistan. The devastation caused by generations of conflict meant that the World Bank was able to have that much more of an impact upon its arrival in 2002. Even the tiniest steps of progress could be appreciated on a wide scale.

“I’m proudest of my time in Afghanistan,” she says. “One thing I liked about it is that I could feel the immediate effects of what we were doing. In other places it’s not so easy. You may not see the benefit of your work until a couple of years after the project closes.”

In Afghanistan, Fraser managed the World Bank’s energy program and led donor coordination efforts for the energy sector. Among her more memorable experiences was working closely with Ismail Khan, a former mujahedeen commander whom President Hamid Karzai appointed as Minister of Energy. Khan had made a name for himself as a fierce and sometimes ruthless leader during the war against the Soviets, and yet there he was, a conservative Muslim working shoulder-to-shoulder with Fraser—a Westerner and a woman, no less—to spur rebuilding efforts.

“There was such a strong feeling of the need for everyone to work alongside one another to get things done, and the hardships we faced together made it that more meaningful,” she says.

In a way, this observation could describe not just her mission to Afghanistan, but every one of her stops around the globe. If Fraser has learned anything from logging all of those miles, it’s that no one can tackle the toughest humanitarian problems alone.

“You come out of business school thinking that you can solve any issue, but seeing the scope of these problems can be daunting,” she says. “I guess that just makes it all the more gratifying when you can come together to bring about some good in this world.”

May 4: Thirty years after the launch of the HP 12c, it’s still common to find the calculator in heavy use among financial analysts. Alumnus James Granberry, MBA’11, a Partner with Oak Point Properties, runs a Facebook fan page for the beloved calculator and is quoted. Full story

May 23: Craig Lewis, the Madison S. Wigginton Professor of Management in Finance, has been named the Securities and Exchange Commission’s Chief Economist and its Director of the Division of Risk, Strategy and Financial Innovation (Risk Fin). Full story

June 6: Alumna Susan Strayer, MBA’07, Senior Director, Global Employer Brand and Marketing at Marriott International, is featured prominently in this article about the challenge of attracting newcomers to around 50,000 hotel positions this year. Many of the positions are in emerging markets such as India and China, which don’t have strong traditions in the hospitality industry. Full story

The New York Times

May 31: A social enterprise called Lumni has raised $17 million to finance the education of a wide array of students in Chile, Colombia, Mexico and the U.S. in the same way startups are financed. Lumni, co-founded by Miguel Palacios, Assistant Professor of Finance, offers “human capital contracts” to people like Jairo Sneider, who grew up in a low-income, single-parent family in Colombia. Full story

Bloomberg Businessweek

May 6: Seeking an edge in the job market, Chinese women are flocking to U.S. B-schools—enough to boost female enrollment overall. John Roeder, Owen’s Director of Admissions, is quoted. Full story

May 25: Kent Thiry, Chairman and CEO of DaVita, a leading provider of kidney care in the U.S., is pictured speaking to the Owen School’s Class of 2011 during Commencement. Full story

Aug. 8: Larry Van Horn, Associate Professor of Management and Executive Director of Health Affairs at Owen, says it’s mathematically impossible to keep up with the ever-growing costs of Medicare and Medicaid. He says he would tax the health insurance that companies provide to employees, which he estimates could bring in $2.5 trillion over the next 10 years. Full story

Forbes

July 25: Owen’s Leadership Development Program, which partners with both Hogan Assessments and Korn/Ferry International, is mentioned as having some of the most innovative offerings of any business school. Full story

Sept. 26: Bruce Cooil, the Dean Samuel B. and Evelyn R. Richmond Professor of Management, is interviewed about an article he co-wrote, “Customer Loyalty Isn’t Enough. Grow Your Share of Wallet,” which appeared in the October 2011 issue of the Harvard Business Review. One of the article’s other co-authors is alumnus Timothy Keiningham, MBA’89, Global Chief Strategy Officer and Executive Vice President at Ipsos Loyalty. Full story

Fortune

Sept. 14: Facing a tough job market, underemployed graduates of professional schools have begun to speak up, some even suing their former institutions, claiming they were duped into acquiring massive debt loads based on the promise of a secure, six-figure-salary job. That promise is particularly critical at business schools, where graduates expect a quick financial payoff as well as an education. Read McNamara, MA’76, Executive Director of the Career Management Center, and Emily Anderson, Senior Associate Director of the Career Management Center and Co-chair of the MBA Career Services Council, are quoted. Full story

NPR

Aug. 15: If being invested in a wildly unpredictable stock market worries you, you’re definitely not alone. In fact, there’s an index to measure that nervousness, and even trade on it. It’s called the Market Volatility Index, or VIX, but it also goes by another name: the fear gauge. Bob Whaley, the Valere Blair Potter Professor of Management in Finance and creator of the VIX, is quoted. Full story

CNBC

June 10: Alumnus Rob Morgan, BS’83, MBA’84, Chief Investment Strategist at Fulcrum Securities, was a guest panelist on The Call, a Wall Street news program co-hosted by Larry Kudlow and Melissa Francis. Watch video

Reuters

June 1: Fixed income trading revenue is falling, and some of the best minds on Wall Street disagree on whether this is temporary weakness or slow death. Hans Stoll, the Anne Marie and Thomas B. Walker Jr. Professor of Finance, is quoted. Full story

Associated Press

June 24: Nashville Mayor Karl Dean, JD’81, wants to capitalize on the city’s recent momentum with the Nashville Music Council, a 60-member group that draws together the music community, city leaders and business interests to find ways to leverage Nashville’s unique position as an all-purpose hub that’s home to more than just country music. The music council recently partnered with the Nashville Entrepreneur Center, a tech business incubator run by Michael Burcham, Lecturer of Entrepreneurship. Full story

Entrepreneur

May 5: To make the best business decisions, your prefrontal cortex—the “executive” part of the brain—must be coaxed into action. Dick Daft, the Brownlee O. Currey Jr. Professor of Management, who says that the average person spends only about 2 to 10 percent of each day using the prefrontal cortex, offers several suggestions for harnessing the right frame of mind to make money and improve productivity. Full story

The Dallas Morning News

Aug. 19: Associate Professor of Management Ranga Ramanujam, whose research focuses on the organizational causes and consequences of operational failures in high-risk work settings, is interviewed about the prevalence of safety problems at Dallas’ Parkland Memorial Hospital. Full story

GreenBiz.com

June 9: AT&T wants to shift more than half of its expenditures to suppliers that track their carbon footprints and save $40 million a year by reducing energy use. The telecommunications giant revealed these and other new goals today with the release of its 2010 Sustainability Report, which was prepared using feedback the company received from students at the Owen School. Full story

Nashville Business Journal

Aug. 2: Among leadership changes including a new CEO, Cracker Barrel has appointed Jim Bradford, Dean of the Owen School, to the company’s board. Full story

The Tennessean

July 13: From January to March of this year, more than 1,800 medical, health and dental offers were published on daily deal sites in the U.S. When the deals are offered, they sell like half-price hotcakes, but some consumer experts and physicians don’t think it’s a good idea. Mark Ratchford, Assistant Professor of Marketing, is quoted.

Jonathan Weindruch

Bruce Lynskey

Rachel Rose

This past spring Rachel V. Rose, MBA’05, Assistant General Counsel and Director of Business Development for BCE Healthcare Advisors, was given the task of developing a new website for her company. Unsure of where to send the requests for proposal, she sought the advice of her former professor and fellow alumnus, Bruce Lynskey, MBA’85, who used to teach entrepreneurship at the Owen School.

Lynskey recommended she talk with another Owen graduate: Jonathan Weindruch, BA’98, MBA’04, Founder and Principal at Websults, a website development firm. After Lynskey put Rose and Weindruch in contact, Websults ultimately was selected through the RFP process, and the website was completed successfully.

“Appreciating the caliber of graduates Owen produces and the faculty we were exposed to, it was reassuring to work with Jonathan, and I’m grateful that Bruce connected us,” Rose says.

Weindruch adds, “It’s always great to work with fellow Owen grads on website design and development projects. They view websites through the lens of an MBA, which in the end helps to produce better results. The shared Owen experience facilitates a great partnership and working relationship.”

Do you have an example of the Owen network in action? Send us your story at owenmagazine@vanderbilt.edu.

While accounting restatements haven’t gone away entirely since then—there were 735 last year, down from a peak of 1,795 in 2006, according to Audit Analytics—they don’t always result in cataclysmic failure. In fact, the market can learn much about the future fate of a company based on the buying or selling of stock by the firm and its managers preceding an accounting restatement.

Research by Nicole Thorne Jenkins suggests that insider trading that occurs before an accounting restatement can reveal a lot about a company’s future performance.

That’s according to new research from Nicole Thorne Jenkins, Associate Professor of Accounting, and co-authors Brad Badertscher of the University of Notre Dame and Paul Hribar of the University of Iowa. Their paper was published in The Accounting Review in September 2011.

“We predict and find evidence that when a firm restates its financial statements, the market uses the magnitude and direction of prior insider and corporate trades to help price the implications of the restatement,” the authors wrote.

Typically when a company issues an accounting restatement, it suffers an average loss of 10 percent in market value. That figure climbs to 20 percent or greater for firms whose restatements have been caused by “irregularities.” More than half the cases of restatements in the authors’ data occurred because of an issue with revenue recognition. Nearly 30 percent were due to things such as improperly recognizing expenses or wrongly capitalizing expenditures.

In the short run at least, Jenkins and her colleagues found that the negative impact of a restatement is softened “when there are net stock repurchases or insider purchases.” The opposite is also true—losses worsen—when “there are net equity issuances or insider selling,” they wrote.

The authors take the study a step further by demonstrating that the market is in fact using a company’s insider buying or selling behavior as a signal for how to price the restatement event. The positive (and negative) effect of buying (or selling) on share price is only found for those trades which have been disclosed publicly.

Preceding a restatement, “selling suggests more nefarious behavior on the part of management, and is likely to increase the information risk premium … while prior buying might help mitigate the uncertainty facing investors,” the authors wrote.

This study offers a “directional” hypothesis, rather than trying to determine the exact magnitude of the effect. In addition, where other research looks for reasons behind accounting restatements—fraud, for example—the authors here look only at how the market acts on public information about the buying or selling actions of management and the company.

Ultimately, the authors conclude, the evidence in this study “suggests that the market begins to look for corroborating or contradicting evidence regarding the future performance of the firm once the restatement is announced.”

Brazil’s large size presented both an opportunity and a challenge for LP Corp.

When building-products maker LP Corp. purchased a production facility in Brazil more than two years ago, it did so hoping to replicate the kind of success it was experiencing in neighboring Chile.

For nearly a decade, LP had been working to introduce its plywood-like oriented strand board (OSB) into the Chilean market—no easy task since houses there have traditionally been built with brick. Nevertheless, the country was developing rapidly, and Chile’s pro-business government was eager to assist foreign companies in creating local jobs, and in LP’s case, introducing innovative new building methods and materials.

All told, Nashville-based LP has seen its revenue attributable to Latin America grow from around $3 million a decade ago to more than $150 million in 2010, with a significant amount coming from Chile. Currently that figure represents more than a 10 percent slice of the company’s annual $1.3 billion in annual revenue.

As those gains accumulated, company CEO Rick Frost turned his gaze to Brazil, a country 10 times larger than Chile, with a youthful population expected to spark demand for as many as 14 million new homes over the next decade. That works out to a rate of about 1.4 million new houses built every year, a figure on pace with the U.S. market. “The beauty of Brazil is that we don’t have to hit a home run—just a single or even a bunt—and we’d fill the capacity of that new mill,” Frost says.

So with its Chilean playbook and new Brazilian factory in hand, the company worked for a year to understand the market and prepare alternative strategies in a country whose land mass rivals China and has some of the most populous cities in the world. But it didn’t seem appropriate simply to copy what had worked in Chile.

“To think that we could take what we learned in Chile and just transfer it to Brazil would be very naive,” Frost says. “For starters, we ran up against the sheer size difference in the two countries. Chile is much smaller, so it was easier to get things done there.” Brazil also has what Frost calls an “impermeable bureaucratic wall” that makes it hard for a foreign company—even one that had acquired a local production facility—to work its way into the construction industry like LP had done in Chile.

Around the time that Frost started to realize that LP wouldn’t be able to copy its Chilean strategy and apply it to Brazil, he happened to mention the company’s Brazil conundrum during a CEO luncheon on doing business in Latin America that was co-hosted by the Owen School’s Executive Programs and the university’s Center for Latin American Studies. The two groups quickly tapped Bart Victor, the Cal Turner Professor of Moral Leadership, who studies developing markets, as well as faculty at FIA Business School, a private offshoot of the University of Sao Paulo, with which Vanderbilt has maintained ties for more than 50 years.

For Victor and Edward Fischer, who directs the Center for Latin American Studies, LP’s Brazil challenge offered a unique opportunity to work closely with a hometown company on an element of its global strategy, while giving MBA students at a partner school the chance to gain real-world learning experience. The pair co-authored a case study based on the problems LP faced in Brazil and presented it to a class of executive MBA students at FIA in Sao Paulo.

“We made it very clear to LP that we weren’t acting as consultants who would come up with a set of precise strategy recommendations,” Victor says. “We wanted to teach them—and the students—how to answer or think about the problem themselves. That’s what we do in academics.”

Victor says the key question involved thinking through what elements of LP’s Chile strategy didn’t apply in Brazil.

“If they could answer that question, they could really start to build a stronger Brazil strategy,” he says. “Let’s think about this in a careful, thorough way. Let’s test the assumptions and unpack the logic. And yes, it mattered that we had this conversation with executive MBA students in Brazil because they know how business gets done there.”

Broken into six teams, the 40 Brazilian students studied the LP case for several weeks before returning to a daylong session with LP executives and course instructors to discuss their findings. While the students came up with some nonstarters—like a suggestion to spend millions on local advertising—much of the advice coalesced around the idea that LP not try to do too much too quickly. “They said we needed to slow down, that we needed to find ways to create market acceptance,” Frost says.

The students helped LP realize that where Chile had sought foreign investment in the country, Brazil tended to be more protective, not just of its markets, but also of its workers. Frost says those insights prompted the company, for starters, to team up with steel workers to show how its products could help save on their material costs. LP also began working more closely with the Brazilian government to help deliver on a need for subsidized housing. Frost says the country has called for 4.5 million homes to get built over three years. LP’s involvement with builders engaged in that effort allows those in the construction industry to experience the company’s products, encouraging local governments to adopt LP materials into their building codes, leading to wider acceptance in upper- and middle-tier markets.

“I don’t know if the class gave us a panacea, but it certainly gave us enough to know that what we were doing wouldn’t work,” Frost says. “It’s also nice to know that we have this kind of expertise in our backyard at Vanderbilt.”

Working through Vanderbilt’s Executive Development Institute on the Brazil project, Frost says there are no formal arrangements in place for more programs, but would welcome similar opportunities.

Says Frost, “You know, I’ve been thinking a lot about Argentina and Colombia … .”

By the Numbers

How Owen figured into the campaign

The Owen School raised more than $92 million against a campaign goal of $85 million.

The highlights include:
$34 million for new endowed scholarships
$20 million for programs, research, facilities and technology
$17 million for new faculty chairs
$12 million for unrestricted and discretionary funding, which led to the creation of innovative new offerings such as the MAcc, MSF, MM Health Care, Americas MBA and Accelerator programs
$9 million for funding with pending designations

Bess Henderson’s husband, Bruce Henderson, BE’37, became a professor at Owen in 1985 after retiring from The Boston Consulting Group (BCG), the global management consulting firm he founded in 1963. Mrs. Henderson worked for BCG for 20 years, retiring at the same time as her husband.

FACULTY CHAIR

The Bruce D. Henderson Chair in Strategy, which Bess Henderson endowed in memory of her late husband, enables a faculty member to teach corporate strategy and conduct cutting-edge research of business practices and other essential issues facing CEOs and experienced managers.

“Bruce was devoted to Vanderbilt his entire life. He was an active alum, serving on the School of Engineering’s Committee of Visitors for a number of years. Establishing a graduate school of business at Vanderbilt resulted in long correspondence with other early advocates. It was Bruce’s belief that Owen would become one of the top-rated business schools in the country. I can think of no better way to perpetuate my husband’s legacy in the field of strategy, as well as to honor his memory, than the endowment of this chair.” —Bess Henderson

Worthy of the Name

E. Bronson Ingram chairs leave a lasting legacy

David Ingram, MBA’89, designated several significant gifts to the Owen School during the campaign, including six endowed faculty chairs named in honor of his late father, E. Bronson Ingram. Those chairs are currently held by the following faculty:

• Nick Bollen, the E. Bronson Ingram Professor of Finance
• Paul Chaney, the E. Bronson Ingram Professor of Accounting
• Dawn Iacobucci, the E. Bronson Ingram Professor of Marketing
• Michael Lapré, the E. Bronson Ingram Professor of Operations Management
• David Parsley, the E. Bronson Ingram Professor of Economics and Finance
• Steve Posavac, the E. Bronson Ingram Professor of Marketing

STUDENT SCHOLARSHIPS

Dale Leo (left) and Wesley Murry are Founder and Principal, respectively, of Sagebrush Investment Partnership LP, a privately managed investment fund. Leo has worked in the hedge fund industry since 1999; Murry has worked in both consulting and real estate since 2001.

The Sagebrush Fund Scholarship, which was endowed by Dale Leo, MBA’05, and Wesley Murry, MBA’06, is available to one incoming first-year student each academic year. The scholarship is intended for those students who have demonstrated: (1) an interest in entering the field of finance, (2) an excellence and drive in both their careers and previous education, and (3) both the maturity and desire needed to become outstanding stewards of the school.

“Establishing the scholarship is a smart investment in the future of business education at Vanderbilt. The seed of our success was sowed within the walls of Owen, and it’s our goal to pay it forward in hopes of inspiring future business leaders and current alumni to do the same.” —Wesley Murry

“Investing in Owen is a no-brainer. It’s where the smart money goes.” —Dale Leo

Thomas Ho is President of Thomas Ho Co., a New York-based financial company that licenses portfolio and risk systems and provides professional services in risk management. He also serves as the FMRC Research Professor of Finance.

The Hans R. Stoll Scholarship, which was endowed by Thomas Ho and his wife, Mabel Chan, provides scholarship support for students whose intended MBA concentration is in finance or those who are pursuing an MSF degree. The scholarship is named in honor of Ho’s longtime friend and colleague Hans Stoll, the Anne Marie and Thomas B. Walker Jr. Professor of Finance and Director of the Owen School’s Financial Markets Research Center.

“Professor Stoll is a founder of modern finance who has contributed significantly to our understanding of financial markets. Moreover, he is an outstanding scholar who has dedicated himself to the pursuit of knowledge and excellence in education. Mabel and I hope that this scholarship will inspire students as Professor Stoll has inspired us all.” —Thomas Ho

STUDENT SUPPORT

Jim Sohr, BE’86, MBA’90, is the past President and Co-founder of AIM Health Care Services, which provides claims cost management services for government and commercial payers of health care benefits. Sohr is also the Co-founder of CorrectCare Solutions, a provider of health care services to correctional facilities.

The Jim and Leah Sohr Family Foundation gift supports the Entrepreneurship Center at the Owen School. The gift provides up to five $25,000 awards annually to Owen students who have developed a detailed business concept deemed viable by their peers and the center’s faculty. This financial support will allow student entrepreneurs to advance the process of building and growing their own businesses.

“Owen helped prepare me for life as an entrepreneur. What better way to give back to the school than to allow future graduates to share in the dream of becoming successful entrepreneurs themselves, who then can provide jobs and give back to their own communities. I also wanted to help Owen compete with other top-tier schools in drawing the most capable students to campus.” —Jim Sohr

__________________________________________________________

Although the Shape the Future campaign has ended, the Owen School still needs funding for several key initiatives. Among the greatest needs are more endowed scholarships, improved technology and a new, larger facility that will help us compete with other leading business schools. Year in and year out, your generosity is crucial to our success, and we thank you for your continued support.

From left, Tom Janson, Paul Jardon, John Mackle and Laurencio Ronquillo in downtown Miami

The CityOwen program is led by alumni around the country and provides value through networking opportunities, updates on the school and featured faculty or staff presentations. The program also helps strengthen the relationship between Owen and local communities in areas such as recruitment.

Birmingham: Sept. 8
C.T. Fitzpatrick, MBA’90, hosted an event at the offices of Vulcan Value Partners. David Owens, Professor of the Practice of Management and Innovation, spoke.

Boston: Oct. 4
Tim Clark, MBA’97; Frank Kimball, MBA’86; Van Simmons, BE’82, MBA’86; Kurt Volk, MBA’99; David Walker, MBA’89; and Derek Young, MBA’91, hosted the inaugural CityOwen Boston event at the Harvard Club.

Knoxville: Oct. 27
The inaugural CityOwen Knoxville event was held at the offices of Bush Brothers & Co.

Memphis: Sept. 14
Thomas Hussey, MBA’98, and Kevin Kimery, MBA’93, hosted an event at the Memphis Hunt and Polo Club.

New York: Oct. 12
Brian Appleton, MBA’02; Andrew Bogle, MBA’04; Shannon McDonald, MBA’04; and John Roberts, MBA’83, hosted the Wall Street Week Reception at the Union League Club.

South Florida: Oct. 18
Tom Janson, EMBA’02; Paul Jardon, IEMBA’99; John Mackle, IEMBA’99; and Laurencio Ronquillo, MBA’03, hosted the inaugural CityOwen South Florida event at Fadó Irish Pub in Miami.

If you are interested in starting a CityOwen group where you live, please contact Alumni Relations at (615) 322-7409.

Global Positioning: New Americas MBA for Executives program spans borders and cultures

Faculty Bob Whaley and Jacob Sagi are the brains behind NASDAQ’s new Alpha Indexes.

It turns out that the process of encouraging entrepreneurship is remarkably similar, according to Germain Böer, Professor of Accounting and Director of the Owen Entrepreneurship Center. “One of the best ways to stimulate a lot of entrepreneurial activity is to create occasions for entrepreneurs to bump into one another,” says Böer. (Watch Böer’s video about entrepreneurship.)

These days entrepreneurs in Middle Tennessee have lots of opportunities to rub elbows, thanks to Vanderbilt and its collaborations with two local organizations: the Nashville Capital Network (NCN) and the Nashville Entrepreneur Center (NEC). NCN supports entrepreneurs and startup companies by providing feedback on business plans and assistance with raising capital. NEC, on the other hand, is a 501(c)(3) public-private partnership that gives its members access to training classes, mentoring resources and networking events.

In addition to the school’s own classroom offerings and funding opportunities, Owen students can get a taste for entrepreneurship by participating in internship programs at both organizations. These internships give them direct exposure to the process of refining a business plan, securing financing and getting a new venture off the ground. Meanwhile the organizations (and entrepreneurs they serve) benefit from the intelligence and enthusiasm that the students bring to analyzing business plans and improving presentations or pitch materials. In sum, it is a winning formula for everyone involved, and at the center of the equation is the Owen School, providing just the right catalyst to spark business growth in Middle Tennessee and beyond.

Germain Böer

NCN: Matching Entrepreneurs with Angels

Getting a business off the ground is always a challenge, particularly for first-time entrepreneurs without the network or connections to raise capital. That is where NCN comes into play. Started as a joint initiative between private investors and the Owen School, NCN maintains close ties with Vanderbilt. Its Executive Director Sid Chambless, BA’96, MBA’03, and Director Chase Perry, MBA’08, are both Owen alumni. Dean Jim Bradford and Professor Böer sit on its board of directors.

NCN has an interesting hybrid structure. The organization is structured as a taxable nonprofit but also manages two venture capital funds: NCN Angel Fund and a TNInvestco Tennessee Angel Fund. The first fund pools the resources of angel investors who also invest individually in NCN-supported companies. The second fund represents the proceeds from $20 million in tax credits that NCN accessed through Tennessee’s competitive TNInvestco program, which seeks to foster entrepreneurial “innovation clusters” across the state by awarding tax credits to a select group of venture capital funds. In addition to the economic development benefits, the state also shares any profits from TNInvestco investments.

To ensure that worthy entrepreneurs have access to an enthusiastic network of angel investors, NCN must provide those angel investors with high-quality, well-vetted investment opportunities. Interning as NCN associates, Owen students work with entrepreneurs to refine their presentations and clean up their business plans. The interns also participate in meetings where experienced local advisers give the entrepreneurs feedback on their ideas. Meanwhile, on the other side of the deal, the students provide deal context and analysis to help angel investors assess the quality of a potential investment. Since its founding in 2003, NCN has helped 23 early-stage companies secure financing, with NCN angel investors providing more than $20 million in funding.

Alumni Chase Perry (left) and Sid Chambless direct the Nashville Capital Network, which supports entrepreneurs by providing feedback on business plans and assistance with raising capital.

Chambless credits Professor Böer and Dean Bradford with forging a strong partnership between NCN and Vanderbilt. “For Owen students who may want to start their own businesses, an NCN internship provides a great opportunity to learn all about the process of capitalizing and growing a business,” Chambless says. “The real benefit for students is to be in the room with entrepreneurs as they pitch to investors, to see the kinds of questions that investors ask. I really think this program is one of a kind in the way it enables business school students to work on live venture capital funds and influence the deployment of those funds while simultaneously working with entrepreneurs in the community.”

NEC: Students in the StartUp Studio

Founded in fall 2009, NEC has met with more than 150 companies and helped 13 of them raise $3 million in angel financing. Four of those companies have since officially launched their businesses. “That’s a pretty good hit rate,” says NEC President and CEO Michael Burcham, who has firsthand entrepreneurial experience himself. Burcham founded three separate venture-backed health care companies before taking on the leadership role at NEC. Burcham also serves as Clinical Professor of Entrepreneurship at Owen, teaching classes about health care innovation and launching ventures.

Michael Burcham

From formal internships and independent study programs to extracurricular volunteer projects, Owen students are involved at NEC in numerous ways. As part of its mission to promote entrepreneurship and economic growth in Middle Tennessee, NEC evaluates new business ideas and offers a series of popular classes and coaching sessions on basic topics, including starting a business, raising capital and building a leadership team. Students assist with these services by organizing classes, delivering training, assessing business plans and offering feedback.

Burcham says there are typically several Owen students working at any one time with the entrepreneurs in NEC’s StartUp Studio incubator space. This temporary work arrangement gives the highest-paying members a business address, access to meeting rooms and classrooms, and face-to-face time with mentors. Students also help organize and run NEC’s technology microfund, which invested in seven new technology startups in 2010, including a company founded by Mark Harris, BS’03, PhD’09, an MBA candidate for 2011.

“A lot of these students either want to work in a startup company or have some interest in moving into investment banking or venture capital,” Burcham says. “By working with NEC, the students gain valuable experience that can give them a competitive advantage when they graduate.”

Learning Entrepreneurship in the Classroom—and Beyond

Henry Oehmig, an MBA candidate for 2011, used his summer stipend to develop a business plan for an environmentally friendly charcoal lighter fluid.

“Our goal in teaching entrepreneurship is to create wealth in the region,” Germain Böer says. “We want to help lots of startups and ultimately create a lot of very successful companies.” In the Vanderbilt MBA program, a lot of this learning takes place inside the classroom in courses such as Launching the Venture, Business Plan Development, Product Design & Innovation, and Accounting & Finance for Entrepreneurs.

Many Owen students, however, learn just as much if not more about entrepreneurship through the aforementioned internships with NCN and NEC. The school also offers its own Summer Enterprise Development internship program. Instead of taking a typical internship in a corporate environment, students can apply to receive a stipend of $15,000 to work on their own startup ventures during the summer between the first and second years of their studies.

Henry Oehmig, an MBA candidate for 2011, was one of three Owen students to receive a stipend last summer. He entered the process with a business plan for an environmentally friendly charcoal lighter fluid made from recycled restaurant grease. Oehmig had been thinking about building a business around a green lighter fluid product for a couple of years, but the Walmart Better Living Business Plan Challenge provided the impetus to build a true business plan around the idea. The annual competition encourages students to invent sustainable products or develop sustainable business solutions and present them to a panel of Walmart executives, suppliers and environmental organizations. The plan developed by Oehmig, fellow 2011 classmate Ian Prunty and three other Owen students won the regional level of the 2010 competition and made it to the national semifinals at Walmart’s headquarters.

After the competition, the other students peeled off to pursue their own summer plans, but Oehmig felt the lighter fluid idea had potential, so he revised the business plan and prepared to make his pitch to the panel of Owen professors, alumni and local businesspeople, including investment bankers and marketing analysts, who were awarding the summer stipends.

“The application process was a great learning experience,” Oehmig says. “Going through the process of pitching our businesses and trying to convince potential investors gave all the applicants a taste of what it is really like to try to raise money when starting a business. There was a lot of camaraderie among all the students who were pitching business plans, and I really enjoyed hearing the other pitches.”

A couple of days later Oehmig was thrilled to learn that he had been awarded one of the stipends. “If you have a business idea that really excites you, there’s no better situation than to be given $15,000 in seed capital without having to give up any ownership stake in the company,” he says. “As a student, it’s terrific because it really gives you a chance to practice entrepreneurship with a safety net in place. If the business does not work out as you’d hoped, you can still go back to your second year of business school with valuable skills and experience, plus a great story to tell recruiters.”

Of course having that safety net did not mean that Oehmig rested on his laurels. To the contrary, Oehmig dove wholeheartedly into making his business a success. He ended up plowing all of the stipend into the venture and then even supplemented it with his own personal funds. During the course of the summer, his vision for the business evolved. Where Oehmig had originally planned on setting up his own manufacturing facility to create the lighter fluid, his talks with biodiesel marketers and manufacturers convinced him that he could launch his venture more quickly and more cost-effectively by outsourcing manufacturing to third-party manufacturers.

His biggest change in direction, however, came when Germain Böer introduced Oehmig to Nashville-based consultant Rick Neitz, who suggested that Oehmig consider licensing the intellectual property behind the product rather than attempting to produce and market the product on his own. For Oehmig, who had a provisional patent on a green lighter fluid formula, the licensing idea had several attractions: He could launch his product faster with less upfront capital and earn revenue from sales royalties. When Oehmig saw that Clorox, which dominates the lighter fluid market through its Kingsford brand, was soliciting ideas for an eco-friendly lighter fluid, he made the decision to pursue the licensing route.

The bulk of the stipend money went toward hiring a professional chemical development lab that could formulate a biodiesel product that closely matched Clorox’s environmental and performance considerations. Although the product formulation was originally supposed to take only six weeks, it ended up lasting more than four months, teaching Oehmig a valuable lesson that product development can take longer than anticipated.

With the product in hand at the end of November, Oehmig has since been in serious discussions with representatives of Clorox and the senior management of other manufacturers. He recognizes that the success of his company will ultimately hinge on whether he can land a licensing deal. “If it doesn’t work out, I’m definitely interested in working with venture capital or private equity firms on investing in early-stage companies,” says Oehmig, who recently interned with Nashville-based venture firm Mountain Group Capital. “I also think I would really enjoy working for a startup company, but a venture capital job might give me a bit more stability while also providing an avenue to stay plugged into the world of entrepreneurship.”

A Great Place to Be an Entrepreneur

As recently as 2009, Christopher Rand, MBA’04, was working in Vanderbilt’s Office of Technology Transfer and Enterprise Development (OTTED), helping the university create and invest in companies based on its faculty’s intellectual property. Today Rand is a Partner at TriStar Technology Ventures, an early-stage venture capital fund that focuses on health care innovation including biotech, pharmaceuticals, personalized medicine, medical devices, health care information technology, and health care services. Both of Rand’s partners have Vanderbilt connections too: Dr. Harry Jacobson, former Vice Chancellor for Health Affairs, and Brian Laden, former Assistant Director in Vanderbilt’s OTTED.

Like NCN’s Tennessee Angel Fund, TriStar is a recipient of TNInvestco funds. During the past year TriStar has used the proceeds from its sale of TNInvestco tax credits to invest in five health care companies. Four of them were already local and one—VenX—relocated to Nashville from Florida to receive funding from TriStar. (TNInvestco rules mandate that companies receiving TNInvestco funds must have their headquarters and at least 60 percent of their staff based in Tennessee within one year of receiving funding.)

“We have seen a great number of opportunities from companies outside the state that are willing to relocate to Middle Tennessee,” Rand says. “Not just in order to receive our investment, but also to take advantage of the strategic value that our group can bring, particularly the connections of someone as well-known and respected as Dr. Jacobson.”

Alumnus Christopher Rand is a Partner at TriStar Technology Ventures, an early-stage venture capital fund that focuses on health care innovation.

Rand and his partners may no longer work at Vanderbilt, but they are still more than willing to invest in great ideas that come from Vanderbilt researchers. One of TriStar’s other portfolio companies is Pathfinder Therapeutics, a company that has developed a trademarked image-guided device called Explorer to help physicians deliver ablation therapy within soft-tissue organs. The technology behind Pathfinder came from the lab of Robert L. Galloway Jr., Professor of Biomedical Engineering at Vanderbilt. In the company’s early stages, Rand worked with Pathfinder’s current Chief Operating Officer Jim Stefansic, MS’96, PhD’00, who happened to earn his doctorate working in Galloway’s lab.

Rand also represents the close ties between Vanderbilt, Nashville’s venture capital community, and groups like NCN and NEC. While working at the university, Rand joined NCN’s board as a Vanderbilt representative and collaborated with Sid Chambless to get promising Vanderbilt-based entrepreneurial concepts in front of NCN investors. Now Rand looks at NCN’s deal flow more from the perspective of a potential co-investor. In his spare time he also serves on NEC’s finance committee and tries to be a resource for that organization’s members.

Rand would like to encourage more involvement between Owen students and Vanderbilt researchers looking to commercialize their ideas and build business plans. He acknowledges, though, that the students already have plenty of entrepreneurial opportunities— not only through Owen’s efforts to promote entrepreneurship, but also thanks to the exciting business climate that has taken shape in Middle Tennessee in recent years.

Before attending Vanderbilt, Rand worked in Atlanta during the dot-com boom, and that experience has afforded him insight into Nashville’s stature as a business hub. “Atlanta had a pretty entrepreneurial environment back then, but I think Nashville is still a much easier business climate to maneuver in,” Rand says. “It’s smaller, more open and more welcoming. It’s actually pretty easy to get in front of C-level people at almost any company in Nashville. In fact, I believe that the entrepreneurial environment in Nashville now rivals almost any place in the country. With TNInvestco, NEC, NCN, the angel investor community … and other programs at the state level, Nashville and Tennessee overall are simply great places to be an entrepreneur.”

Editor
Seth Robertson

Contributors
Clark Bosslet, Nelson Bryan (BA’73), Tim Ghianni, Jennifer Johnston, Blake Knight, Casey Savell, Ryan Underwood (BA’96), Amy Wolf

Photography
Daniel Dubois, Steve Green, Joe Howell, Lauren Owens, Anne Rayner, John Russell, Susan Urmy

Designer
Michael T. Smeltzer

Art Director
Donna Pritchett

Executive Director of Marketing and Communications
Yvonne Martin-Kidd

Associate Dean of Development and Alumni Relations
Cheryl Chunn

Editorial Offices: Vanderbilt University, Office of Development and Alumni Relations Communications, PMB 407703, 2301 Vanderbilt Place, Nashville, TN 37240-7703, Telephone: (615) 322-0817, Fax: (615) 343-8547, owenmagazine@vanderbilt.edu

Please direct alumni inquiries to: Office of Development and Alumni Relations, Owen Graduate School of Management, PMB 407754, 2301 Vanderbilt Place, Nashville, TN 37240-7754, Telephone: (615) 322-0815, alum@owen.vanderbilt.edu

Vanderbilt University is committed to principles of equal opportunity and affirmative action. Opinions expressed in Vanderbilt Business are those of the authors and do not necessarily reflect the views of the Owen School or Vanderbilt University.

Vanderbilt Business magazine is published twice a year by the Owen Graduate School of Management at Vanderbilt University, 401 21st Avenue South, Nashville, TN 37203-9932, in cooperation with the Vanderbilt Office of Development and Alumni Relations Communications.

© 2011 Vanderbilt University. “Vanderbilt” and the Vanderbilt logo are registered trademarks and service marks of Vanderbilt University.

The Global Business Association (GBA) and Japanese Business Club (JBC) joined efforts last October to send 34 students, Dean Jim Bradford and David Parsley, the E. Bronson Ingram Professor in Economics and Finance, on an excursion through Japan as part of the GBA’s third annual fall break trip. The purpose of these trips is to educate the Owen community about global business through internationally focused academic and cultural activities. In our case, we learned about Japan’s economy, primary industries, culture and business customs.
Taking 36 people through four cities over an eight-day period can be a daunting task, but my fellow organizers and I were up for the challenge. Amrita Dutta-Gupta, BA’03, Dwyla Beard and I helped coordinate the trip for the GBA. The JBC organizers were Toshinao Endo, Hiromasa Shimomoto and Hideaki Suga. All six of us are in the MBA Class of 2011.

“One of the most educational and fun aspects of organizing the Japan trip was working with the Japanese Business Club,” says Dutta-Gupta, who serves as President of the GBA. “Through the planning process, which included weekly meetings and innumerable emails over six months, we were able to form stronger friendships, which will endure beyond our experience at Owen.”

TRAVELOGUE

Preparations
Prior to the trip, all participants were provided an overview of the business and cultural customs of Japan. Heiki Miki, MBA’96, Section Manager of Line Pipe Export at JFE Steel and a member of Owen’s Alumni Board, educated participants about common language terms and proper business etiquette.

The GBA group with alumnus Tadaaki Yamaguchi at JFE Steel in Tokyo

Day 1: Tokyo
The first company we visited was Microsoft, where we learned about the customization and localization of its products for the Japanese market. In the afternoon we traveled to JFE Steel. Tadaaki Yamaguchi, MBA’02, provided us with direct exposure to the entire steel manufacturing process, including raw materials procurement, the creation of pig iron in a 2,192-degree blast furnace, and the final rolling of high-performance steel sheets.

An evening with the maiko in Kyoto

Day 2: Tokyo
We toured several Tokyo sites, including the Meiji Jingu shrine, the Imperial Palace, the Asakusa Kannon temple and the Nakamise shopping arcade. That evening we participated in an izakaya party. An izakaya is a drinking establishment that offers a variety of small dishes, which are shared by all at the table.

Day 3: Kyoto
We traveled to Kyoto via bullet train (Shinkansen), which can go upwards of 187 mph. Upon arrival we visited the Kinkaku-ji and Kiyomizu-dera temples. We also viewed a kimono fashion show at the Nishijin Textile Center, which had beautiful silk textiles on display. In the evening a few of us experienced traditional Japanese entertainment performed by geisha (called maiko in Kyoto), ate delicious local cuisine and played drinking games while in the maiko’s company.

The Genbaku Dome, now part of the Hiroshima Peace Memorial, was one of the few buildings left standing after the atomic explosion in 1945.

Day 4: Kyoto, Osaka, Kobe and Hiroshima
While half the group stayed in Kyoto or ventured to nearby Osaka and Kobe, the other half took the bullet train to Hiroshima. I opted for the latter, and it was one of the most powerful experiences of my life. We toured the city with two atomic bomb survivors who have learned English in their old age to tell their stories of what happened on Aug. 6, 1945, and in the months that followed. This spurred a thought-provoking discussion about World War II among our group.

Following Hiroshima, we ferried to an island called Miyajima to see the Itsukushima shrine and its famous torii, or gate. One of the unique things about the island is that its wild deer are accustomed to people and wander around the tourist sites. At one point we literally walked side by side with a baby fawn and its mother. The experience was quite serene—the perfect epilogue to Hiroshima.

Kelly Leo with Dean Bradford and Keith Whitman in Hakone

Day 5: Kyoto, Kameyama and Hakone
This was the busiest day of the trip. Before departing Kyoto we visited Gekkeikan, the largest sake producer in the world, and learned about its manufacturing process. Elizabeth Childs, an MBA candidate for 2011, says, “The highlight for me was being able to stand on top of a silo holding 111,000 gallons of sake. That was incredible!”

In the afternoon we headed to the Sharp Electronics factory in Kameyama, where impressive LCD, 3-D and Quattron technology was on display. Sharp also impressed us with its CSR (corporate social responsibility), highlighting the use of solar panels to provide energy to both the factory and the adjacent town.

We finished the day in Hakone, where the highlights were participating in a traditional enkai (Japanese-style banquet), visiting an onsen (natural hot springs) and singing karaoke with Dean Bradford!

Day 6: Gotemba and Tokyo
Leaving Hakone, we visited Terumo, a prestigious medical device company in Gotemba. The company’s facilities serve not only as corporate headquarters but also as a research-and-development and training center, which includes a mock hospital. Shigeru Aono, MBA’05, who is Manager of the Oncology Business Unit at Novartis Pharma K.K., joined the group for a tour of this impressive facility.

After a long day of travel, most of the group spent the evening navigating the Tokyo subway system to find last-minute souvenirs or catch a glimpse of the night skyline from the Toyko Tower. I opted for a neon-filled stroll with my husband, Keith Whitman, BS’03, a fellow MBA candidate for 2011. We walked through the Akihabara neighborhood, popularly known as “Electric Town,” where most of Tokyo’s young go to play video games or shop for the newest electronics.

Day 7: Tokyo
Bright and early at 4:45 a.m., the group traveled via taxi to the Tsukiji Market, one of the largest fish markets in the world, where we witnessed a live tuna auction. Flash-frozen tuna from the prior day were sold for $5,000–$30,000 each and distributed to local restaurants and markets worldwide.

From left, MBA candidates Stephanie Kaye Ramirez, Amrita Dutta-Gupta, Kimberly “KJ” Johns and Cindy Yeo at the Tsukiji Market in Tokyo

Smelling like fish, we then headed to Kirin Beverage Co., where Yuichi Yamada, MBA’07, and Tomoaki Asanuma, MBA’07, provided an in-depth presentation about the soft drink, bottled water, juice and tea market in Japan, where Kirin is the market leader. Their presentation would have made Owen’s marketing and strategy faculty quite proud.

We finished the day by traveling to Nissan’s headquarters, where we received an overview of its new electric car, the LEAF, and a private showing of all the vehicles on the floor. Later that evening, Dean Bradford hosted an alumni dinner with help from Kazuaki Osumi, MBA’05. All of the trip participants and alumni in the area were invited. The 15 alumni who attended said they longed to visit Nashville and Owen again. We hope they can make it back soon!

Day 8: Tokyo
On our final day, we visited SECOM, a pioneer in Japan’s security services market. Hideki Hirazawa, MBA’00, Director of the IT/Health Care Division at SECOM, and his team discussed what they are doing in the health care space and spoke about the various health care challenges in Japan. It was quite a relevant and fascinating presentation given the current debate over health care reform in the United States. After leaving SECOM, we then toured the Tokyo Stock Exchange, where we learned about its modernization, trading trends, main players and derivatives market.

From left, MBA candidates Toshinao Endo, Hideaki Suga and Hiromasa Shimomoto at the Tokyo Stock Exchange

We are extremely grateful for the insight, assistance, dedication and translating abilities of the three aforementioned JBC organizers (Endo, Shimomoto and Suga) who worked tirelessly throughout the eight days to ensure an educational, welcoming and never-to-be-forgotten experience.

Additionally, this trip would not have been possible without the efforts of our alumni. “They were extremely excited about our visit to Japan,” Dwyla Beard says, “and they supported us by opening the doors of their companies for our visits. Although Vanderbilt is located in the U.S., the Japanese alumni reminded me that Owen alumni are exhibiting leadership all over the world.”

Arigato gozaimasu, Japan!



Kelly Leo, BS’03, is an MBA candidate for 2011 and the Vice President of Owen Bridges within the Global Business Association. Owen Bridges helps international students acclimate to Owen and the Nashville community through one-on-one mentorships and group activities.

See more photos of the trip and other GBA activities.

Bob Whaley

New research by Bob Whaley, the Valere Blair Potter Professor of Management, and Jacob Sagi, the Vanderbilt Financial Markets Research Center Associate Professor of Finance, has led to the creation of a recently launched group of NASDAQ indexes. The NASDAQ OMX Alpha Indexes are designed to help investors measure performance between individual stocks and exchange-traded funds. In practice, this means that the returns of popular holdings such as Apple and Citigroup could be isolated from sharp swings in the market. Traditionally it has been difficult—if not impossible for some—to trade directly on the relative performance of one asset compared to another.

In a new research paper describing how relative performance indexes work, Sagi and Whaley use the example of Apple (AAPL) compared to the S&P 500. In September 2008, AAPL’s share price plummeted by 32 percent, more than three times the amount lost in the broader markets. Seeing such an outsized decline in AAPL’s share price compared to the market overall may have signaled a buying opportunity to some investors. But as the financial crisis worsened, AAPL’s share price fell by another 1.4 percent. During the same time, however, the broader market fell by about 16.6 percent.

“AAPL outperformed the market as the investor expected,” Sagi and Whaley write. But anyone who had purchased shares of AAPL, while beating the market, would still have suffered a loss.

Jacob Sagi

If an investment tool based on a relative performance index had been available to capture AAPL’s performance against the market, however, it would have yielded a substantial gain.

To try and replicate that same trade using the tools available at the time, an investor would have had to buy a long position in AAPL, while shorting, or betting against, a product like an S&P 500 index fund. The central risk in that scenario is that an investor would be exposed to an unlimited loss in the short position. By contrast, a relative performance index would place at risk only the original amount of the investment. Further, the money and time spent rebalancing those trades to account for volatility in both the long and short position would be too much for most investors to bear.

While the derivative products on the indexes developed by Sagi and Whaley can be used to invest in the relative performance of any pair of securities or exchange-traded funds, NASDAQ OMX so far has unveiled 23 index options tracking “highly liquid” assets, including:

NASDAQ headquarters in New York City

• AAPL vs. SPY Index (symbol: AVSPY)
• Gold (GLD) vs. SPY Index (symbol: GVSPY)
• Twenty-plus Year Treasury Bonds (TLT) vs. SPY Index (symbol: TVSPY)
• Citigroup (C) vs. Financial Sector (XLF) Index (symbol: CVXLF)
• Emerging Markets (EEM) Index vs. SPY Index (symbol: EVSPY)

For now, Sagi and Whaley see the relative performance indexes as providing an easy and low-cost way to execute what traditionally has been a cumbersome trade. But as these indexes become more widely used, the authors say, they could introduce entirely “new return/risk management strategies to the investment arsenal.”

Read more about Whaley and Sagi.

Watch a CNBC interview with Whaley about the NASDAQ indexes.

At the Center of Research

The sweep of history represented by the finance faculty is nowhere more dramatically represented than in the Financial Markets Research Center (FMRC). Founded in 1987 to foster research in financial markets, instruments and institutions, it has long promoted interaction among executives, researchers and the Owen faculty, particularly through its renowned annual conference. Hans Stoll, the Anne Marie and Thomas B. Walker Jr. Professor of Finance and Director of the FMRC, calls the center “our window on the real world and our connection to what’s going on and the issues that face policymakers and financial executives.”

Hans Stoll and Tom Ho

Stoll is known for developing put-call parity and for seminal work in market microstructure, which has become a major subfield within finance. He is also credited with providing analysis that demystified the role of futures in the crash of 1987, leading to a more balanced approach to regulation amid calls for drastic measures. The breadth and depth of his work have earned him one of the industry’s most stellar reputations—he has been elected President of both the American Finance Association and the Western Finance Association—and the markets still bear the stamp of his contributions.

Tom Ho, who has worked with Stoll since they co-authored papers at the Wharton School in the late ’70s, serves as the FMRC Research Professor of Finance. Through voluminous research, papers and books, Ho has been key to introducing rigorous mathematical modeling to securities. His work with the Thomas Ho Company, providing analysis and consulting to financial institutions, is an example of the integration between Vanderbilt finance research and the business world. It also demonstrates how the FMRC is bringing together all the elements of financial education, research, practice and policymaking.

Watch Stoll’s video about the FMRC.

Watch Edward DeMarco, Acting Director of the Federal Housing Finance Agency, deliver the keynote address for the 2011 FMRC Conference.

Academic Firepower

Bob Whaley and Jacob Sagi

The huge impact Owen has had on the world of finance grows larger this year with the introduction of NASDAQ OMX Group’s Alpha Indexes. Developed by Bob Whaley, the Valere Blair Potter Professor of Management, and Jacob Sagi, the Vanderbilt Financial Markets Research Center Associate Professor of Finance, the indexes help investors isolate the performance of individual stocks or commodities from broader shifts in exchange-related funds. This will, according to Sagi, “allow investors to understand correlations better and allow for interesting hedging opportunities.”

The idea for the indexes started when alumnus Eric Noll, MBA’90, who serves as NASDAQ OMX Group’s Executive Vice President of Transaction Services, turned to what he calls the “academic firepower” of Whaley and Sagi for help in developing new NASDAQ products. Noll was looking for something of the caliber of the Market Volatility Index (VIX), or “Fear Index,” created by Whaley for the Chicago Board Options Exchange in the early ’90s. The VIX, which quantifies the market’s expectation of short-term volatility, has become a highly influential measure; a futures contract based on it has traded publicly since 2004. Sagi, an expert on asset pricing and decision theory with wide-ranging research and practical interests, has conducted research with Whaley on relative performance indexes.

The NASDAQ OMX Group is offering derivatives of the indexes that will allow investors—primarily institutional at first—to bet on or guard against fluctuations in the worth of securities or funds. The products are designed to help investors hedge against the kind of market swings exemplified by last year’s “flash crash.” The collaboration between Vanderbilt and NASDAQ is, Sagi says, “the kind of thing that demonstrates how you can take research-based knowledge and apply it in a way that helps people and brings value to the market.”

Read more about Whaley and Sagi’s research.

Watch Sagi’s video about the creation of the NASDAQ indexes.

Wellspring of knowledge

David Parsley, Bill Christie and Nick Bollen

As veterans on the finance faculty, Professors Bill Christie, Nick Bollen and David Parsley represent a wellspring of theoretical and applied knowledge, transmitting real-world experience and academic rigor to the classroom. Their accomplishments are among the school’s most noteworthy.

Christie, the Frances Hampton Currey Professor of Finance, analyzed NASDAQ pricing in the ’90s and found that market makers were implicitly colluding to maintain artificially high trading profits at the expense of investors. His research led to sweeping reform of the NASDAQ market, the introduction of the SEC Order Handling Rules and a billion-dollar settlement. Christie also served as Dean of the Owen School from 2000 to 2004.

Bollen, the E. Bronson Ingram Professor in Finance, authored a cutting-edge 2008 study of hedge fund liquidity that quantified the risks to investors facing the restriction or suspension of withdrawals from hedge funds during market turmoil. The subsequent financial crisis bore out his conclusions, as many funds closed and others were revealed to be fraudulent. His most recent research focuses on predicting which funds are at a higher risk of fraud by examining their statistical footprints for peculiarities best explained by misreporting.

Parsley, the E. Bronson Ingram Professor in Economics and Finance, has shown through his research into political connections and lobbying that the portfolios of firms with higher lobbying intensities and expenses outperform those of firms without such connections. He also has discovered that politically connected firms appear to be less sensitive to market pressures to increase the quality of financial information given to minority shareholders. His current work includes seeking explanations for the globally declining impact of exchange rates on prices.

Watch Christie’s video about the real-world consequences of research.

Watch Bollen’s video about the study of hedge funds.

Watch Parsley’s video about the world economy.

Emerging ideas

Miguel Palacios and Alexei Ovtchinnikov

The Owen finance faculty’s reputation continues to grow thanks to newer members like Alexei Ovtchinnikov and Miguel Palacios, both Assistant Professors of Finance. Ovtchinnikov has done widely cited work on corporate political contributions, showing in a large-scale study published in The Journal of Finance that there is a positive and significant relationship between such donations and both stock returns and return on equity. His follow-up study examined the nature and effectiveness of individual contributions, particularly to politicians with oversight of industries having economic impact on contributors. Ovtchinnikov is now looking at the flip side of the coin, studying the way government policy affects corporate decision-making.

Palacios’ work on human capital, its quantification and its effect on other assets’ prices, is decidedly and excitingly off the beaten path. One question he raises is what effect the retirement of baby boomers, who will no longer have future earnings as an asset, will have on the value of stocks. Another is the possibility of a financial instrument tied to future earnings, and whether such an instrument “might make people willing to take more risks in stocks and other investments, changing their price and return,” he says. He and a business partner have explored the practical aspects of his questions for the last nine years, founding a company called Lumni Inc., which pays for the education of young adults—many who could not afford college otherwise—in exchange for a small stake in their future earnings. His book Investing in Human Capital: A Capital Markets Approach to Student Funding was published by Cambridge University Press in 2007.

Read more about Ovtchinnikov’s research.

Read more about Palacios’ research.

Watch Ovtchinnikov’s video about political donations.

Watch Palacios’ video about the value of human capital.

Steering a new course

Kate Barraclough

Australian-born Kate Barraclough jumped at the chance to take a more active role in oversight of the school’s Master of Finance (MSF) program. As its Director, she says, “I see myself as taking an already excellent product and raising its profile by engaging and coordinating its stakeholders—faculty, alumni, employers and current and future students. My aim is to build a great program, recognized as one of the best in the country.”

Her background is yet another example of the way in which research, teaching and real-world experience come together within the Owen faculty. A former manager at KPMG Canberra and financial consultant to the Australian government, she has research interests that include asset pricing, derivatives and bond markets. Under her guidance, MSF has introduced a new course on financial modeling (which she teaches), formed a board of advisers made up of distinguished alumni and friends of the school, and created an internship program for the MS Finance Class of 2012. The latter was an initiative proposed by alumnus Bruce Heyman, BA’79, MBA’80, who is Managing Director and Partner at Goldman Sachs in Chicago and a member of Owen’s Board of Visitors.

Barraclough is working to encourage cohesion within the MSF group with a number of MSF-only classes. “A key part of my role is mentoring our students, encouraging and supporting them while they are at Owen,” she says. “Seeing them grow through their experiences at Owen is extremely rewarding for me.”

Wall Street Presence

Sean Rogers, BA’87, MBA’95

It would be difficult to overstate the Vanderbilt presence in the world of business and finance. Thousands of graduates carry the lessons learned here into boardrooms, exchanges and regulatory offices worldwide. One notable example is Sean Rogers, BA’87, MBA’95, a key figure in one of the two largest financial institutions on Wall Street.

Rogers serves as Managing Director at Bank of America, overseeing communications technology. He works closely with senior management at companies like Nokia, Ericsson and Motorola, advising them on an array of financial matters, including capital formation and structure, corporate finance, mergers and acquisitions, joint ventures and IPOs. It is a job that requires wide-ranging knowledge applied to complex but specific situations in real time, and he cites his increasing appreciation of the “softer skills” he learned at Owen.

“It’s learning how to study,” he says, “how to work in teams, how to communicate with your counterparts. As you become more senior in investment banking, what makes someone good or bad comes down to qualitative skills. You’re more concerned with building relationships, with understanding issues. You become results-oriented.”

More and more, those relationships transcend borders and backgrounds. “That’s why both the student mix and the interdisciplinary possibilities at Owen, like those with the Vanderbilt University Medical Center, are so valuable,” he says. He also cites the class size and the close relationships he was able to develop with both students and professors. He has long since been returning the favor, bringing his business expertise to Owen as a member of its Board of Visitors—something that is particularly important in that Bank of America has become the single biggest recruiter of Owen grads.

Tools of the Trade

Vikas Dwivedi, MBA ’00

Vikas Dwivedi, MBA’00, says his career has become “all energy, all the time.” After stints at Shell Oil, Enron, Prudential Equity Group and Morgan Stanley, and a rating as No. 1 stock picker in electric utilities in 2004, he is bringing his experience in energy and commodity trading, private equity, project development, operations and engineering to bear on his own firms. He is a Principal at BTU Capital Management, a Houston-based hedge fund focused squarely on energy, and Quantum Energy Partners, a $5 billion private equity firm.

“It’s focused on natural gas,” he says of BTU, “and our trades will allocate capital directly into futures and options on the commodity itself.” He came to Owen as an engineer and an energy trader, but says, “I didn’t have any real sense for the broader capital markets and the bigger world. Seeing how those markets work and how they impact each other and impact energy was very helpful. It gave me a much bigger perspective on how stuff is really put together. And not having a financial background, it was a really good rounding experience to learn accounting and a little more on corporate valuation.”

In addressing students and recent graduates, he encourages creativity and daring. “Never assume everything’s been solved,” he says. “There are always other markets and other problems if you can help solve or even identify them. I’d also recommend a bit of irreverence for the way markets work. They’re not perfect. See if you can insert yourself into something that’s not quite right, which is always an opportunity.”

Professor Gary Scudder, who was diagnosed with aggressive stage IV mantle cell non-Hodgkin’s lymphoma in August 2009, has been cancer-free for more than a year.

This article and the accompanying sidebars discuss cancer from the perspective of two patients—Professor Gary Scudder and alumnus Michael Oyler—and a caregiver, student Sarah Burfitt. All three express gratitude for the help and encouragement they have received from Owen’s close-knit community, and they hope their stories provide solace for others facing similar journeys.

Imagine going to see your dermatologist and leaving her office knowing you have several swollen lymph nodes. That is exactly what happened to me in early August 2009. I was told “run, don’t walk” to my primary care physician, which I did—the dermatologist’s office even called to make sure I had followed their directions. My physician quickly ordered a CT scan, and it verified that my numerous swollen lymph nodes were likely a sign of some form of lymphoma. It actually took 20 more days until we had the final diagnosis: aggressive stage IV mantle cell non-Hodgkin’s lymphoma.

When any cancer is diagnosed, the words “stage IV” and “aggressive” are not what you want to hear and serve to raise anxiety levels to new highs. Immediately my mind jumped to scary questions like “How long do I have to live?,” “Is this kind of cancer curable?,” and so on. These questions and fears became an everyday part of my life for the next nine months.

At the beginning of September, my wife, Marti, and I met with our hematologist/oncologist at Vanderbilt University Medical Center for the first time. He spent almost two hours explaining my particular disease and his treatment plan: six 21-day cycles of intense chemotherapy. In addition, at the end of these six treatments, I would be having a stem cell transplant, which would renew my immune system with cancer-free stem cells. My chemo regime showed great promise in clinical trials—which, incidentally, weren’t completed at the National Institutes for Health until last month.

During my first month of treatment, it was necessary to identify possible stem cell donors. If I was in total remission, I would be able to use my own stem cells, but if not, a matched donor would be necessary. Transplant recipients have a fatality rate of 15 percent or more, so this was a very anxious time for us. Both of my sisters were tested to see if either was a match and could be a donor. We were overjoyed when the call came that my younger sister was a perfect match! This was the first really encouraging piece of news on our journey.

Scudder with wife, Marti, at home

Thankfully I was spared the extensive side effects of chemo during my treatments. I believe one of the major reasons why was prayer. Yes, I had to deal with low blood counts, increased risk of infection, fatigue and other issues. I also ended up in the hospital twice during my stem cell transplant, going in both times late at night for high fevers. But overall I had little nausea, and my symptoms were not as bad as they could have been.

My first post-chemo scans were not until Nov. 23, or 11 weeks after the start of my treatment. We teach Owen students in our operations courses about managing waiting times and reducing anxiety, but I must admit it was very difficult to wait a week for the results. I felt like I had started a class, so to speak, when I was diagnosed back in August and there had been no feedback on my progress until those tests. It was as if all the weight was on the final exam.

On Nov. 30 we received news that most of my scans were clear, but there was one final result needed before I could be declared “squeaky clean.” My nurse practitioner had told me not to expect anything until the next day, but during her drive home she received the great news that my final scan was clean and called me from her car.

Having determined that I was in total remission, we proceeded with the stem cell collection and transplant. I was thankful that I was able to use my own cells and not those of my sister. The transplant occurred in March after two more rounds of chemo and a final, more intense round to kill my existing immune system. This last one was the hardest to tolerate, but we knew it was necessary for my future health.

As I write this, I have been in remission for more than a year, but doctors do not use the term “cured” for this disease. I am instead “cancer-free” and taking little medicine—a miraculous outcome given where I started in August 2009. I finally came back to Owen full time at the start of the 2010–11 school year, after missing an entire year for my treatments.

Every type of cancer is treated with its own protocol, but the journey for every patient and caregiver has similar highs, and especially lows. The hardest part for me was waiting for and receiving the initial diagnosis. Another low came when the doctor told me about the treatment. I had gone into the meeting with expectations of spending one day every three or four weeks receiving chemo (very typical for lymphoma patients), not four days in the hospital every three weeks. It also took a major change of mindset to adjust to the length of the treatment. There is no such thing as instant gratification when you get chemo—you can’t pay for a next-day cure!

How did I cope throughout the process? It took a lot of support of family, friends, our church, colleagues and the medical community. In particular, my wife and I relied on our Christian faith and took solace in the stories of the many folks who had taken this journey before us.

We want to thank everyone for the outpouring of love we have received. Many of you visited me while I was in the hospital, sent notes through CaringBridge, mailed cards, gave me rides to my semiweekly appointments, and brought us wonderful meals. We were well cared for by the Owen community, including current and past students, faculty and staff. Alums visited from as far away as California and Montana. Another alum sent me a hat to cover my bald head. (Speaking of bald heads, it has been interesting to observe how many men starting chemo are really concerned about losing their hair!)

In addition, I would be remiss not to express our overwhelming gratitude to the Vanderbilt nursing staff on 11 North, and my nurses and doctors in the hematology and stem cell transplant clinic. My care was exceptional!

Finally a special thanks is due to Dean Jim Bradford for his continuous support during this trying season of our lives. He kept me updated on major initiatives during the year, so when I returned to the faculty full time in June 2010, I was still knowledgeable about various aspects of the school.

A fellow mantle cell “journeyer” once wrote to me about blind turns in the cancer treatment process—we know the turns are coming but have no foreknowledge of what is around the corner. Hebrews 11:1 says, “Now faith is being sure of what we hope for and certain of what we do not see.” The first set of scans, the results of the stem cell donor testing, my semiweekly blood tests, my reactions to my treatments—many areas of our journey were filled with these blind turns. We received favorable news at each turn, but that is not guaranteed.

Trials like this change one’s perspectives on what is important in life. People become more important, daily tasks much less so. Trials are used to strengthen us for future trials and enable us to assist others who are suffering. My wife and I are already reaching out to several others making this journey (including Michael and Sarah, who wrote the accompanying sidebars). Please continue to keep us in your thoughts and prayers in the coming months as we pray for a durable remission—one that lasts five, 10 or even 20 years!

Gary Scudder is the Justin Potter Professor of Operations Management and the Faculty Director of International Programs.

Using VUMC’s dedicated trauma unit as a case study, Hyer and her colleagues found that focused delivery of health care can improve overall hospital performance.

With millions of new patients coming into the U.S. health care system over the next decade, the term “operations” is taking on a whole new meaning in America’s hospitals. Starting in the year 2014, as many as 32 million additional people will be covered by health insurance under the federal reform law passed last year. That additional demand comes at a time when medical facilities are struggling to reduce costs, improve safety and provide higher patient satisfaction.

To address these issues in the past, many health care facilities looked to manufacturing and its specialized product lines as a model for how to treat patients most efficiently and effectively. But little research has been done on how well these new “focused delivery” units have worked. To investigate this question, Nancy Lea Hyer, Associate Professor of Operations Management, turned to a dedicated trauma unit at Vanderbilt University Medical Center for answers. The case study was published in the Journal of Operations Management in 2009, and last year won that publication’s Best Paper Award.

“The following two questions were used to guide our research,” writes Hyer, who collaborated on the project with Dr. John A. Morris Jr., Professor of Surgery and Director of the Division of Trauma and Surgical Critical Care at Vanderbilt University Medical Center, and Professor Urban Wemmerlöv from the University of Wisconsin–Madison. “(1) How does the concept of focus, as it is used in connection with manufacturing plants, transfer to the context of a critical care hospital setting?, and (2) How does focus affect operational, clinical, and financial outcomes?”

Since 1987 the Medical Center has served as Middle Tennessee’s only Level I trauma center—meaning it is equipped to handle the most severely injured patients—within a 150-mile radius. By 1993 executives at the Medical Center authorized the creation of a separate $5 million, 31-bed facility called the Vanderbilt Trauma Center. The dedicated facility opened in August 1998.

Administrators staffed the Trauma Center with a designated team of doctors, nurses, social workers, even security and cleaning personnel, and outfitted it with X-ray and lab equipment. Physicians work 12-hour shifts instead of the traditional 24-hour rotation, so they are in-house and immediately available during their time on duty. And the facility itself was designed with an open-bay concept to accommodate the center’s 14 intensive care unit beds. This layout permits cross-trained staff to assist each other as needed and makes it easy to rapidly reconfigure the unit to respond to changing circumstances, such as a sudden influx of critically injured patients.

Nancy Lea Hyer

Prior to the creation of the Trauma Center, patients were transferred from unit to unit throughout the hospital as their recovery progressed. In directing patient care, trauma physicians traveled all over the hospital seeing patients and interacting with a wide array of staff, who cared for both trauma and nontrauma patients. In the new critical care facility, the dedicated staff delivers care in a single location and manages patient care through much, if not all, of the patient’s hospital stay. This has allowed the unit to develop and hone a specialized set of treatment protocols.

The Trauma Center also has its own financial director, who tracks physician and staff performance in much the same way a private company would. And to further differentiate themselves as an independent entity in the hospital, nurses and other staff wear distinctive black uniforms.

Did the measures work? To answer that question, Hyer and her co-authors examined the dedicated center’s length-of-stay, mortality rates and financial metrics. To compare before and after performance, researchers used data from 1996–1998, the two years before the separate Trauma Center opened, and from 2000–2002, which allowed for a period of adjustment.

The length of stay for patients treated in the dedicated trauma center declined by an average of 6.5 percent overall, and by 15 percent for those with more severe injuries. However, researchers detected no change in the mortality rate.

On the financial front, trauma care operations showed losses of $2.2 million and $1.75 million in 1996 and 1997, respectively. In 1998 the Trauma Center saw a small surplus of $50,000. By 2000 and 2002, however, the independent trauma facility showed surpluses ranging from $5.5 million to $7.89 million. Calculated on a per-patient basis, the unit turned an average loss of $578 per patient into a surplus of $2,493 per patient. Researchers also found similarly positive results when comparing the unit’s performance to benchmark peers.

“The discovery by the trauma unit’s managers that [Vanderbilt] discharged patients quicker, while charging comparatively less for its services, was both an affirmation that the focused hospital unit worked as intended and a sign that they needed to increase the charge levels and have [the Medical Center] translate these into better contracts with the payers,” the authors write.

Looking into some of the reasons for the improved performance on length-of-stay and financial measurements, researchers found ways the staff became more efficient treating patients. For example, before the creation of a separate trauma center, tracheotomies (a common procedure for patients who may be on a ventilator for an extended time) had typically been performed in an operating room, where it took an average of 80 minutes’ worth of physician time. In the new Trauma Center, doctors developed a bedside tracheotomy procedure, which takes only 15 minutes of a doctor’s time and is just as safe as one performed in a fully equipped operating room. Whether done in an operating room or at the bedside, however, the high reimbursement rates are the same, allowing the Trauma Center to capture the financial gains.

The finding prompted the unit to redouble its efforts to charge procedures more accurately for reimbursement, and most important, not to overlook them as had sometimes been done when patients were shuttled between departments.

But the authors acknowledge that one case study is not enough to suggest a need for broader changes within the health care system. Further, they write that nothing in their research suggests that the creation of a dedicated unit in itself is “a sufficient condition for success.” Rather, such initiatives should be aligned with other changes to factors such as hospital infrastructure, management and culture.

Nevertheless the case does indicate a need to further explore reasons why a dedicated unit can help bolster hospital performance. “Hopefully,” the authors write, “future studies will determine with greater precision what factors need to coexist with [focused hospital units] to create better performing health care delivery organizations.”

Watch Hyer’s video about process improvement.

Kim Parlett with husband, Mark, and dogs in Montana

There was no single “aha” moment that convinced Kim Parlett, MBA’04, to leave her job at a marketing firm and embrace a more rustic way of life. Rather, she says, it was a series of realizations during a 2009 horse-packing trip through Yellowstone Park that helped her make up her mind.

“I was continually struck by the beauty around me,” Parlett says. “It reminded me just how small my problems really were. You go for a hike under the big sky, and everything gets put into perspective.”

Today that big sky country is playing a big role in her career. As Manager of Lone Mountain Ranch, a Montana ranch specializing in family vacations, Parlett is responsible for helping guests enjoy the best that nature has to offer, including Nordic and downhill skiing, fly-fishing, horseback riding and tours of nearby Yellowstone.

“Out here they say you eat the scenery. That’s your salary,” she says. “You may not make a lot of money, but the real payment comes from being able to live in such an amazing place.”

While the setting for her new job is undoubtedly different from that of her corporate experience, which included stints at both General Motors Corp. and Miller Brewing Co., Parlett says there are a surprising number of similarities when it comes to the business itself. “Budgeting, forecasting, marketing and operations are a lot of what I do at Lone Mountain Ranch,” she says. “The frameworks you apply are the same whether you’re at a Fortune 500 company or a small mom-and-pop shop.”

Parlett credits Vanderbilt with helping her understand those frameworks more fully. In fact, her experience at Owen opened her eyes in much the same way that her Yellowstone trip did. “Before business school I felt like I was just a small piece of the pie at my company,” she says. “Vanderbilt sparked my interest in being more involved in all aspects of business.

“It really helped me see the bigger picture.”

George Sibble at the pump

A new mobile application called SmartFuel allows drivers to search for live gas prices along any route in the United States, find the cheapest price and save an average of $5 with every fill-up. SmartFuel provides this information by gathering credit card purchase data that is continuously updated.

That is just one of the features that sets it apart from other mobile apps, says George Sibble, BE’06, MBA’08, President and CEO of Iridium Development, the company responsible for SmartFuel. Sibble estimates users will save $250 a year with the app, which is available for both the iPhone and Android. In case the user has any doubt about the savings, SmartFuel also conveniently keeps track of how many times it has paid for itself.

Sibble started Iridium, a holding company that creates subsidiary business around mobile apps, in 2009 under the auspices of the Nashville Entrepreneur Center, whose President and CEO is Michael Burcham, Clinical Professor of Entrepreneurship at Owen. (Learn more about Burcham and the center.)

Sibble says new apps are in high demand but creating them can be expensive. The process involves not just coming up with ideas but thinking through what is called “use case.” For example, the creators of SmartFuel realized it made more sense for a user standing by a gas pump to enter gallons purchased rather than mileage. “I want something used, and I want it to be efficient,” Sibble says.

“I see solutions all around. Whenever I see a problem, I also see that it can be solved through an application,” he adds. “I just want to get it up and out there.”

Alexei Ovtchinnikov

The 2010 U.S. Congressional elections saw an unprecedented boom in campaign spending—$4 billion in all, with about $1.12 billion coming in the form of individual contributions to candidates, according to the Center for Responsive Politics. While political pundits continue to debate what impact this money has on election outcomes, new research from the Owen School points to some clear winners: the individuals who donate and the corporations they support.

Using innovative techniques to match geographic areas that are most affected by government policy with “economically relevant” politicians, the husband-and-wife team of Alexei Ovtchinnikov, Assistant Professor of Finance, and Eva Pantaleoni, Researcher at the Vanderbilt Kennedy Center for Research on Human Development, analyzed nearly 5 million campaign donations between 1991 and 2008.

What they describe in a new research paper is strong evidence that individuals who make political donations—whether at the behest of firms or not—directly benefit companies in their communities.

“The reason we look at individual contributions is because it accounts for about two-thirds of all the money given directly to politicians,” Ovtchinnikov says, noting that only about 10 percent of firms are actively involved in campaign finance. “Individuals are the big players in this game.”

But it’s companies that are reaping the most recognizable benefits. Ovtchinnikov says firms located in areas that most intensely target “economically relevant” politicians see positive changes in return on asset (ROA) and market-to-book ratios. The bottom-line boost that comes from campaign donations is similar to investing in a new research-and-development or capital-expenditure project.

Further, the economic benefit to firms strengthens when donations come from areas that have high unemployment rates—even if the politicians on the receiving end do not live in that district.

The new study also finds that political contributions flow disproportionately from companies’ home districts to key members of Congressional committees with jurisdiction over their industry. “What you’re seeing is an ability for people to reach politicians with dollars when they can’t reach them with votes,” Ovtchinnikov says.

The net result is that a significant amount of political donations come from narrow geographic clusters. Between 1991 and 2008, for example, three small areas around New York, Chicago and Washington, D.C., accounted for 11.7 percent of all campaign contributions—$425.9 million—even though they represented less than 2 percent of the population.

While the most recent study examined individual donations, a previous study by Ovtchinnikov and others published last year in The Journal of Finance shows a correlation between corporate political donations and higher stock returns.

David Parsley

“Our results … suggest an extremely high rate of return for firms participating in the political contribution process,” Ovtchinnikov and his co-authors write. “Alternatively, it is possible that politicians find it most beneficial to grant favors to large firms because those are the firms that generate the largest amount of tax revenues and jobs.”

In a similar study, David Parsley, the E. Bronson Ingram Professor in Economics and Finance, has found that corporate lobbying is “positively related” to a firm’s financial performance. In that study—where the top five firms in the U.S. accounted for 42 percent, or $160 million, of the total amount spent on lobbying in 2005—Parsley says that portfolios of companies engaged in the most intense lobbying efforts significantly outperformed their benchmark peers.

“Firms in this category earned an excess return of 5.5 percent over the three years following portfolio formation, while the rest of the firms earned essentially a zero excess return,” Parsley and his co-authors write. They do note, however, that the study’s results indicate that the gains were achieved through defensive lobbying, suggesting that simply spending the most on lobbying does not necessarily lead to better financial performance.

For his part, Ovtchinnikov says these studies, by demonstrating that campaign and lobbying expenditures have positive effects on corporate performance, open up intriguing new lines of inquiry for researchers.

“We have shown that firms are benefiting,” he says. “Now we need to begin asking why they benefit.”

Read more about Ovtchinnikov and Parsley.