The Honors Program

I had the honor of attending the induction ceremony for new Honors Program members. While I have sponsored a couple of honors options with students, I didn't quite understand the program as well as I do now. Dr. Dan Martin is director of the program and showed a film (produced by a former honor's student) that explained the reason for such a program. The Honors program provides a way for students to challenge themselves beyond the regular curriculum--not unlike other areas like atheletics, art or other extracurricular organizations. Dr. Saz Madison, professor of psychology also spoke at the ceremony; he is a former Rockhurst graduate and was an Honors student. Dr. Madison is a great role model for the kind of people this program can produce. Also at the cermony were several faculty, many of whom teach honors courses like Dr. Kovich and Dr. Sturgill. Congratulations to all 37 new Honors students and I hope they all challenge themselves to do things even they didn't imagine.

AIG -- Defending the Undefendable

The outrage of AIG's (the insurance giant that is now 80% owned by taxpayers) recent $165 million bonus payout is quite understandable. First, the people receiving the bonuses included executives and traders from the derivatives division--the one that led to the company needing a government bailout. John Q. Public doesn't mind when people are rewarded for getting results, but see unfairness when they get rewarded for messing up the livelihoods of others. Second, the government, who now mostly owns the company let it happen--and did so even as they were negotiating a second $30 million bailout just a few weeks ago.

The PR blunder of the bonuses is immense and no less than Peter Drucker predicted such reactions years ago. In writing about the professional manager, who acts as an agent for the firm, Drucker claims their first edict of responsibility was to not knowingly do harm. He then said that there are some issues that are very harmful even if they are done unwittingly. First among these sins is executive compensation. Drucker reasons that excessive compensation schemes (e.g., large bonuses) does harm because of the perception of inequality it creates. This perception is exaggerated, but it puts the company on the defensive, just as the AIG CEO is now explaining to Congress how this $165 million fiasco happened. It sounds like it went badly for Mr. Liddy.

So how can we defend the undefendable (i.e., AIG executives)? Well my colleague, Turner White asked his students a very good question: "Why would AIG pay the bonuses?" The pile on answer is arrogance and/or greed. But there is another answer that makes sense: fulfillment of contracts. Even if Mr. Liddy (and his board who in this case was the President and Congress) hated the idea of the bonuses they felt some compunction based on meeting contractual law. In fact business fundamentally one of an infinite number of transactions and these are governed not only by the honest dealings of the parties involved but by the rule of the law. While bad decision were made all around on this deal, it is as likely the actual commission of the bonus bonanza was a case of feeling compelled to follow the law.

Focus, Focus, . . .

As I and my student enjoy this spring break, I get to catch up on some reading. In the news I notice the theme of not overreaching and trying to do too much. This morning, eBay makes the front page of the Wall Street Journal (usually when companies make the first page it is for the wrong reasons). eBay has been struggling lately because consumer preferences have changed and becasue, according to the article, eBay has strayed from its roots of being an online marketplace for used and clearance stuff. Over the last few years, eBay has tried to expand into retailing and internet telephony only to see this be a drain on profits.

Politically, President Obama is facing his own crisis of overreach. In the last week high profile business leaders and supporters such as Warren Buffett and Andrew Grove have made this exact point. Buffet says "Job 1 is to win the war, the economic war. Job 2 is to win the economic war — and Job 3 . . ." Grove in a more academic tone (he is a successful businessman who likes to play professor) says to change things one at a time--and fixing the financial crisis comes first. The message as today's article from Time suggests is that Obama is trying to do too much; better to focus on just a few things. Of course Obama has the challenge of trying to placate numerous interest groups who helped elect him.

Which leads me to myself -- I have too many things on my to do list this week from too many different realms such as grading for my courses, scholarly writing, tasks I can't put off any longer, taking care of family obligations like getting passports done for my family (and figuring out how to get the pictures the right size for the application!!). Of course, eBay can sell off its extraneous assets but not so easy to get rid of these tasks except to do them. But I am not complaining -- it is spring break.

Dr. Wheeler

A week ago Friday I had the pleasure to interview students for the our annaul competitive scholars event. It was a pleasure because every one of the 14 students I saw were top notch and I was very glad they were considering Rockhurst.

It was also my pleasure because I was able to work with Dr. James Wheeler. In our interviews everyone introduced themselves including the fauclty interviewers. I told the students as way of introduction I had been with Rockhurst for nearly 15 years . . . Dr. Wheeler, silent on the subject at first, finally fessed that he had been at Rockhurst for 53 years. I knew Dr. Wheeler a bit but that number still startled me.

Anyway, Dr. Wheeler is still great with these MUCH younger students. He asked questions about what these kids were passionate about -- one girl gave a moving account of why exactly she wanted to go into nursing. Come to find out he received the 2nd Ph.D. at UMKC for Chemistry. And he still loves teaching. The fact that he has been here so long is not that relevant to him -- but working with students certainly is.

Markets are Partisan -- and that is Good

It is a given that people dislike partisanship and President Obama won the election partly on the platform of moving county into a post-partisanship age. In his first significant legislative bill, he did not succeed in overcoming a partisan result – the bill was passed on a nearly straight party basis. Jay Cost, however, makes an interesting case against bipartisanship in Three Cheers for Partisanship! Briefly, Cost asserts that partisanship is a result of real differences in people’s views of things and that it is what gives political parties any useful identity. A majority of people are not well informed on the nuances of issues, but they do affiliate with a party based on its brand identity. Bipartisanship blurs this brand identity and is likely to confuse people on the different world views.

This rings true when you apply to business. In a “partisan” market, products vie for positions based on differences. It is these differences (often embedded in brand images, but also having real attributes) that help consumers choose. When choices become indistinct within some product category (or market) the consumer is put in a tough position. First, consumers are typically not well-informed on many products they buy. The positioning and branding of these companies (and products) help consumers make choices on all kinds of products. Without these distinctions made, imagine how hard it is to decide on the thousands of product (and service) choices made each year (I do this everytime I am in Costco!). Our minds would not only be confused but overwhelmed.

In cognitive psychology parlance, these brands help form schemas in our brains to allow us to make much quicker (but not always correct) decisions. In fact, the classic marketing book by Al Ries and Jack Trout says it all in the title—Positioning: The Battle for Your Mind.

Partisanship and Markets are both taking their lumps these days -- but there is another side that should be considered.

Vancouver

I am writing from Vancouver, Canada -- spending 3 days facilitating a leadership training course for Electronic Arts managers. Being in Canada you would expect it to be cold -- and it is. Funny thing though is that Vancouver is usually not this cold -- so the natives say. In fact, we got a little snow today and the traffic got crazy, making Kansas City not look quite so bad on the driving in bad weather front. Actually, Vancouver is only a couple hours from Seattle and has similar weather.

The trip is the first stamp on my passport, but the experience has not been that inspiring. Spent 2 hours trying get past the border. First we waited over 30 minutes just to get to an agent, then were swooped into the building to be interrogated by a border guard. Interesting interrogation: "Why you coming to Canada?" . . . "What do you do that a Candadian company cannot do?" . . . and so on. Found out we needed special work permits to enter the country. They spent over an hour determining this. I think it would have been easier to simply visit a friend!

Rockhurst will look good when I am back on Friday.

Catch me if you Can . . .

This past week was pretty much a lost one for me -- I spent it at home sick. I did have a chance, however, to see the movie, Catch me if you can, based on the story of Frank Abagnale a convicted con artist.

The movie is about the relationship between the con artist, with DiCaprio playing Frank Abagnale, and FBI agent Carl Hanratty (played by Hanks). I was especially interested in Hanks' character as he spends much of the movie just missing out on catching his man (who by the way was only 16 when he started his schemes). The movie had Handratty withstanding every abuse possible from the sleight of hand of Abagnale, yet also shows leadership in the way the FBI agent tries to get the con man to change his thinking. For example, one late scene has Abagnale, after being given the opportunity to trade his jail cell to work for the FBI, reverting back to his old ways and leaving town as a bogus pilot. Handratty is there and confronts the young man but does not stop Abagnale. My conclusion was that Handratty was trying to get Abagnale to make the choice to come back -- it had to be Frank's choice, not imposed by authority.

So I was interested to learn more about this Carl Handratty character. But there is no Carl Handratty, though his character is largely based on that of FBI agent Joe Shaye.

In fact, director Steven Speilberg probably changed the name because of license they took in creating the character. There was no one agent focused on Abagnale, but a whole team. The Handratty character was created to tell us about Abagnale. Actually, the decision by Speilberg makes sense because it is his job to tell a story -- otherwise it is a documentary.

Still, I came up empty, and a little disappointed, in my search for that true, unconventional leader. Beware of those words "based on a true story."