“The airline industry is very volatile,” said Michael Cox ’77. “It’s got more downs than ups, but it’s the lifeblood of commerce around the world.”

It has been for Michael Cox ’77, who has worked in the airline industry in some capacity for more than 25 years. “It’s a very dynamic environment…it’s probably one of the worst industries in the world from a return standpoint because there are so many variables to screw it up,” he said, noting at the same time that there are also tremendous opportunities within the industry.

“The airline industry is very volatile…it’s got more downs than ups, but it’s the lifeblood of commerce around the world,” he said, describing that volatility as appealing to many, including consultants.

Cox is the managing director of the Seabury Group, a consulting firm that caters to the needs primarily of commercial aviation clients, such as Delta, Frontier, Air Canada, China Eastern, Air New Zealand, and Singapore Airlines. Before joining the firm in 1998, he learned the business working for Continental Airlines, where he started as an analyst and made his way up to vice president and treasurer positions. During his time at Continental, the company went through two bankruptcies, so Cox knows whereof he speaks when he consults with airlines in financial distress. “The joke was they didn’t pay us in money, they paid us in experience,” he said. But the experience has paid off, as it led him to a very successful career in consulting.

With all the turmoil in the industry, it’s a great time to be a consultant.

Airlines have taken a major hit during the recession as people are taking fewer pleasure trips and businesses are cutting back on travel expenses. It’s the latter that hurts most, as business class airfare can cost ten times economy class. Though analysts are saying that the economy is starting to turn around, Cox says the forecast is still bleak for airlines. “It’s going to be an ugly environment for airlines for some time to come, at least until the balance of supply and demand returns to equilibrium,” he said.

“The joke is, you know how to make a million dollars in the airline industry? Start with a billion.”
– Michael Cox ‘77

Airlines have responded to this crisis through consolidation, capacity cuts, and selling off assets to raise cash capital to stay competitive. “It’s an extremely competitive business,” he said noting that “like a wolf would jump on a wounded rabbit,” airlines all watch each other for signs of distress so that they can drop fares in certain areas to finish off a struggling competitor. Cox sees consolidation as a healthy thing for the industry, comparing it to the Big Three U.S. automakers: the market can only sustain so many big carriers. However, sticky issues can arise with federal regulation of these mergers for antitrust measures.

While the airline industry is currently in a down cycle, there are good things on the horizon, says Cox, who mentioned new technologies that will soon enable flights to go further, eliminating some connection flights and opening new markets.

Cox is a self-described “propeller head.” “I’ve always been fascinated by airplanes.” His passion for his work is hard to miss as he shared some of his career highlights, such as saving an airline from going under in one week, or remaking South African Airways into a profitable business with a new corporate culture. “It became my baby,” he said. “I was very proud of our accomplishments.” It’s that kind of drama that keeps Cox in this career, which constantly stressful and not at all conducive to a quality family life. The job appeals to his desire to fix things. Even after all these years, he’s still thrilled by the opportunity to turn around a company in distress, snatching it back from the brink of bankruptcy.

Mr. Cox received his MBA in finance and accounting from the University of Texas at Austin and his BBA in business management from Texas A&M University. He visited Mays Business School in November to share his experience with students.

This year’s Aggie 100 honorees represented a wide variety of industries, including dentistry, veterinary, construction, truck freight matching, and an online virtual zoo.

The Aggie 100 recognizes the 100 fastest growing Aggie-owned or –operated businesses in the world, as gauged by the company’s compound annual growth rate over a two-year period. The 5th annual Aggie 100 list was announced on Friday, November 6, at a lunch hosted by the Center for New Ventures and Entrepreneurship (CNVE) at Mays Business School. Claiming the top spot for 2009 was J.C. Schoel ’00, founder and vice president of sales and business development at Andersen Schoel, a contract office furniture business established in Harker Heights, Texas in 2002. Andersen Schoel experienced a whopping 287.54 percent growth rate for the 2006-2008 period.

Of the top 10 companies on the list, four were led by Mays graduates: Kelly Jones ’83, CEO, owner, and founder of Digital Discovery Corps; Ryan Reichardt ’04, president, owner, and founder of Reichardt Construction; Frank Tanner ’87 and Jeff Mackey ’87, founders and owners of Mackey & Tanner; and Clay Schlinke ’94, owner of Tesoro Homes & Development.

Richard Lester, director of the CNVE and master of ceremonies for the event described the Aggie 100 companies as the “backbone of the American economy,” and commended them for their outstanding progress in the face of less than ideal economic conditions.

The Aggie 100 companies account for 10,000 employees and $7.6 billion in annual revenues.

Though half of the honorees on the Aggie 100 list were repeats from a previous year—including MacResource and New Tech Engineering, which have been on the list all five years—the top dog, Andersen Schoel, was a first-timer.

Schoel says his original idea was to start a business with his father once he completed his military service. They planned to sell furniture in the education market as an add-on to the teacher-resource stores that his mother owned. However, their market research revealed another opportunity: selling to the military. In less than a decade, their business has grown exponentially, servicing corporate clients as well as government agencies. They now also provide design, installation, and office relocation services.

Schoel, who graduated with bachelor’s and master’s degrees from A&M in industrial distribution, says being named to the Aggie 100 won’t be a one-time deal: he intends to make the list again next year. He’s planning expansion, adding a second location, even amidst a down economy.

Schoel had advice for the audience regarding the recession: Imagine a river. When the river is high, you can’t see the rocks. “When the river is down, that’s the time to get the rocks out of the way,” he said, so that when the river rises, you can have a smoother ride than before.

Notable numbers

Accounting firm PKF Texas crunched the numbers for the Aggie 100, ranking each of the businesses. Interesting statistics that arose are:

• The number 100 company had a compound annual growth rate of 19.48 percent. The number one company’s was 287.54.
• Nine of the companies ranked were owned or operated by someone named Michael or Mike.
• Three father-son teams made the list, including the top company.
• The Aggie 100 companies account for 10,000 employees and $7.6 billion in annual revenues.
• Class years of recipients ranged from 1959 to 2005. Class of 1990 was the most represented year on the list.
• The businesses represented a wide variety of industries, including dentistry, veterinary, construction, truck freight matching, and an online virtual zoo.
• Companies were located in seven states and seven countries.
• Half of the honorees are graduates of the A&M Look College of Engineering.

Owner of several industrial services businesses, Phil Miner ’80 didn’t make the top ten, but his achievement is worth noting: at least one of his businesses has made the list each year, setting the record with a total of 10 Aggie 100 recognitions. In 2009, his companies made the list three times.

The purpose of the Aggie 100 is twofold: to celebrate the achievements of successful alumni, and to bring those entrepreneurs into the classroom as guest lecturers so that current students can learn from them. Thirty-five of the 100 honorees spoke to classes across campus. Honorees also purchased tickets for 100 students to attend the lunch ceremony, enabling them to be inspired by successful former students and to build their professional network. “That’s part of the real power of this event,” said Lester.

Nominations for the 2010 Aggie 100 will begin January 15. Applications will be accepted May 1 through June 30. Email Lenae Huebner, assistant director of CNVE, if you have questions.

About The Center for New Ventures and Entrepreneurship

The Texas A&M Center for New Ventures and Entrepreneurship provides encouragement, education, networking and assistance to entrepreneurially minded students, faculty and Texas businesses. Founded in 1999, the center is part of Mays Business School’s Department of Management. The center enhances student education through campus speakers, competitions, work experiences and financial support. The Texas A&M faculty and Office of Technology Commercialization benefit from the center’s educational programs, extensive business community network and the entrepreneurial services. The center also reaches out to the state’s business community offering educational programs, business assistance and access to university resources. The center is supported by corporate and individual members and sponsors who believe in the value of an entrepreneurial education program and the value of Texas businesses working with Texas A&M University.

For more information

• Aggie 100 web site
• Photo Gallery: 2009 Aggie 100 Luncheon and Reception

BusinessWeek’s methodology ranks the top 25 schools and recognizes the second 25 in an unranked list of leading Executive MBA programs. Although not ranked in the top 25, the Mays program is listed in the second 25, the first time that BusinessWeek has recognized the program in its bi-annual rankings.

About the Texas A&M Executive MBA Program

The Executive MBA Program from Mays Business School at Texas A&M University is a rigorous educational program designed for qualified business professionals. Based in The Woodlands, just north of Houston, the two-year program is built on an innovative curriculum that focuses on creating value in your organization. Through peer discussion, case studies, and dynamic interaction with our accomplished faculty, the Executive MBA Program provides our participants with skills and learning they can put to work immediately. For more information, please contact the Executive MBA office at emba@tamu.edu.

Yet each student has an experience of one, so what do we do to bring the advantages of small to them? How can they receive individual attention and make connections that are meaningful? I’ll mention just two ways that Mays Business School is a small place.

Mays is in its ninth year of offering the Freshman Business Initiative, which places our freshman students in small cohorts that are mentored by a sophomore or junior student. The FBI (as it is known) is offered to all incoming undergraduate students. A thousand students broken into groups of 12 is a large program to run, and its impact on their experience at A&M is big, though hidden in small numbers.

Texas A&M University began offering freshman seminars that have fewer than 15 students per class, with the intent of giving these new students the opportunity to interact closely with a faculty member. I am in my second year of leading one of these seminars using the Wall Street Journal as a textbook. Meeting once a week, we discuss current events through the business media lens. The class also develops the students’ oral and written communication skills. This class provides me with the opportunity to open students’ minds to the joy of learning while keeping me connected to the youngest of Aggies.

So, while Mays is a big school in terms of size, we are a small school in terms of attitude. The result? Our students get the best of both worlds. It’s an exciting era for us as we develop leaders for a global society.

A sari clad housewife in rural India coughs as she cooks over a smoky “chulha” stove, burning wood or cow dung for fuel. The walls around the cooking area, like her lungs, are smeared with black residue. The amount of toxins she breathes in while preparing meals for her family each day is equivalent to 20 cigarettes. She coughs again, her eyes burning from the smoke. She wishes there were another way to cook, but she, like millions of other poor people in the world, can’t afford a better stove.

Until now.

A new product was recently unveiled, designed specifically for the needs of the poor. The Combination Chulha is smokeless, can use biomass or natural gas, is durable, and most significantly, it’s affordable. It is also better for the environment (it has less carbon emissions than her previous method of cooking) and good for the local economy, as housewives are becoming entrepreneurs, selling the stoves.

What’s brilliant about this story is easy to overlook—a company saw the opportunity embedded in poverty. It’s a concept that has transformational significance, says C.K. Prahalad, who is excited about the opportunities that exist at the bottom of the wealth pyramid. Opportunities to make money, yes, but also to change the world.

Prahalad, an author, educator, and businessman of renown, recently spoke to students at Mays Business School about the changing landscape of global business.

“I believe we have a huge opportunity to build a world that’s totally different from what we’ve inherited. We cannot get to this place through analysis. We must imagine this world. We must have personal courage, passion, humanity, and humility. We cannot analyze our way into this opportunity, we must imagine our way into this opportunity.”

– C.K. Prahalad

Need spurs invention

Volatility is everywhere: Climate change; terrorism; genocide; pandemic flu; unpredictable consumer reactions; wild swings in commodity markets such as oil; major shifts in government in the United States, India, Japan, and Russia; and let’s not forget the global recession. “It’s not just a financial crisis,” says Prahalad, The crisis is all encompassing

C.K. Prahalad speaks to Mays faculty and students at the inaugural Dean’s Distinguished Scholar Lecture.

But don’t panic. With adversity comes innovation. The opportunity before us now? The total transformation of business.

“In a range of industries there is a fundamental reset that is taking place,” says Prahalad—a boon for young people entering the marketplace, as they will be on the cutting edge of this change, with the opportunity to influence the way we do business in the future. According to Prahalad, a new economic model is rapidly emerging, one that will be characterized by low capital intensity and increased customer intimacy, paired with new consumption patterns.

As in the example of the combination chulha, Prahalad says we are moving from a firm-centric society to a consumer-centric society—one where consumers dictate what products are made and at what price they are sold, and businesses respond with products tailored specifically to the needs of their audience.

Prahalad points to the Build-a-Bear Workshop as another example as it’s a highly customized product, tailored to the individual customer (an “n=1” business model). While the product is a teddy bear, what consumers are spending their $80 on is an individualized experience. This is in direct opposition to the traditional toy industry model, which focuses on mass production of a homogenized item at low cost.

As the recession makes paupers of more and more of the population, Prahalad says that businesses need to figure out how offer Build-a-Bear service at a price that is affordable to the world’s poorest. Like Jaipur Foot (jaipurfoot.org), an Indian company that creates high-quality prosthetic limbs—an n=1 product, as each limb must fit the patient precisely—for about $35 a piece. That’s mere pennies on the dollar for what an amputee would pay for a prosthetic in the U.S., where artificial limbs can cost $10,000 to $15,000.

How is it possible to offer a quality product at that kind of price? It’s the old adage, “necessity is the mother of invention.” Prahalad says in the U.S., where people have money and insurance, there isn’t such a focus on super-low design cost. In India, where extreme poverty is widespread, engineers are forced to work smarter to create a product at an affordable price.

Because if it’s not affordable, it won’t sell. If it doesn’t sell, the business dies.

Connectivity fuels the future

In addition to innovation from the bottom up, Prahalad sees connectivity as the major transformative element in business today. How would it change business, he asked, if every person in a company contributed to projects in a wiki format, so that the talents of each are fully utilized?

On a larger scale, Prahalad asked his audience to consider how to improve a cardiac pacemaker. If they aren’t improved via obvious means—making them smaller, cheaper, or with a longer battery life—how could they be made better? By making them an n=1 product: monitor the activity of each patient’s pacemaker; when it’s activated due to a heart problem, a computer would send an automated text message to the patient; if medical attention is needed, the patient would receive directions to the nearest hospital, where the staff would be notified of his impending arrival and his medical records would be sent so that his care would be immediate and accurate.

This sort of service can’t be offered by one provider, but it is possible with a network of providers working together in a complex ecosystem. Eventually the idea of a supply web will replace the traditional supply chain. And that, says Prahalad, is the future of business. As consumers demand more personalized products, connectivity can make it possible.

We are in a new age of innovation, he says, one where every consumer has a voice and where information and commerce are becoming democratized. “I believe we have a huge opportunity to build a world that’s totally different from what we’ve inherited,” he said, commenting that every person must have access to high quality products and services, as well as the means to buy them. “We cannot get to this place through analysis. We must imagine this world. We must have personal courage, passion, humanity, and humility. We cannot analyze our way into this opportunity, we must imagine our way into this opportunity.”

(Left to right) Luis Gomez-Mejia, Lowry Mays ’57, Benton Cocanougher, and Jerry Strawser ’83 at the dedication of the Benton Cocanougher Chair in Business.

Mays, who funded the chair with his wife, Peggy, spoke warmly of Cocanougher at the event, saying that “Benton has been a very close friend of our family for a long time.” Cocanougher was dean of the business school when Mays endowed it with a gift of $15M in 1997. Mays said he was impressed with the leadership Cocanougher provided to the business school, and continues to provide to A&M. “He’s a great teacher and an incredible leader on this campus,” said Mays, who compared Cocanougher to the 12th Man for his willingness to serve A&M wherever there is a need. Presently, he is interim dean of the George Bush School of Government and Public Service and prior to that position, he was interim chancellor of the Texas A&M University System.

Cocanougher thanked Mays for the honor of the gift naming and for his continued involvement with the school. Cocanougher commented that as important as Mays’ original gift to the school was, branding the school with his name was even more impactful. “Lowry built a great corporation, but he was also instrumental in changing the very nature of the communications industry and he did it all with an unblemished record and a commitment to public service,” he said. “And that’s a very special asset for any academic program.”

“Through their generosity, Peggy and Lowry Mays are improving the lives of tens of thousands of people,” said Cocanougher, mentioning the Mays’ many other charitable endeavors. Their recent activity at Mays Business School was in the amount of $7.5 million with matching funds to create a $12 million gift; this gift is dedicated to faculty support and will provide six faculty chairs and three eminent scholar chairs, including the Cocanougher Chair.

Gomez-Mejia joined A&M in fall 2009 from Arizona State University. He is highly regarded globally as an expert in his field. “A&M for me was always the pinnacle, so it still seems sort of unreal that I’m here,” he said. He acknowledged that the honor of being the first to hold the prestigious chair, named for and created by two such important men, came with a certain amount of pressure for his performance. “I will try to keep your good name up,” he promised.

And, when I graduate, why should I consider working at H-E-B? Aren’t I earning a college degree so that I don’t have to work at a grocery store?

Scott McClelland, president of H-E-B food and drug for the Houston region, speaks to business students as part of the third annual H-E-B Day at Mays.

These are the type of questions that were discussed during the third annual H-E-B Day at Mays Business School at Texas A&M University on October 14. The event, hosted by the Center for Retailing Studies at Mays, invited executives from H-E-B to speak to classes of all disciplines within the school, from agribusiness to accounting, giving practical lessons on topics such as assortment, marketing and promotions, and innovation. Executives, including presidents, vice presidents, and directors, addressed more than 2,300 students in 20 classes.

For most college students, H-E-B is the place to look for Ramen noodles and Coke, not a career. However, with 325 stores in Texas and Mexico and annual sales in excess of $15 billion, the privately owned Texas grocery chain may be worth a serious look from business school grads said Scott McClelland, president of H-E-B food and drug for the Houston region.

According to McClelland, the recession has been great for the grocery industry, as people are eating at home more than they were when they had more discretionary income. He introduced students to his “share of stomach” concept: the stomach as a pie chart, indicating where percentages of food came from—grocery store, restaurants, vending machines, etc. As people tighten their budgets, restaurants share of stomach decreases, while the grocery store share increases. McClelland joked that in the grocery business you hope for recessions and hurricane scares, as both drive shoppers to the store.

Echoing his thoughts on the economy, Molly McAdams, vice president of Own Brands at H-E-B, talked with students about the strategy behind marketing each of the company’s five private label brands when she addressed an upper level marketing class. McAdams says that in a value economy, shoppers’ brand loyalty is challenged, and they are willing to switch from name brand to store brand items in order to save money. McAdams also talked about private label products, like H-E-B’s Easy Melt, that are equal to or superior to national chain brands, like Velveeta, but cost less. This gives H-E-B leverage over suppliers: by pricing Easy Melt well below Velveeta, they can sell more of the store brand, which helps them negotiate a more competitive price with Kraft Foods on their product.

McAdams informed students about the branding effort she has been involved with at H-E-B after a customer survey revealed that shoppers weren’t aware of the difference between Hill Country Fare (the economy store brand) and H-E-B (the premium store brand). She shared about H-E-B’s efforts to differentiate and reinforce the brands through customer education. “Each one of [our brands] is really important to the portfolio, because in the world of H-E-B, we believe that every customer in our marketing area is our customer,” she said, emphasizing the spectrum of the store brands offered by H-E-B. “We want everyone shopping at our stores. What we always say about market share is that when it comes to market share, we don’t share…We’re not just looking for people that make a lot of money, we’re not just looking for people that are below the poverty line. We want everyone to shop at our stores.”

Senior Vice President Tina James talks about H-E-B’s corporate philosophy during her keynote address at a luncheon for guests, faculty and students.

On a related note, McClelland discussed the stratification of H-E-B store formats to meet the needs of diverse demographics. The chain offers traditional grocery stores, in addition to H-E-B plus stores, which carry a greater selection of general merchandise and have increased service; Mi Tienda, a grocery store aimed at the Hispanic population; Central Market, the store for “foodies,” which sells organic and natural items; and coming soon, SmartShop, a smaller grocery format with a focus on economy. He presented about assortment across each of the store formats and the shifting assortment needs across the state. “People in Houston don’t shop the same way as people in San Antonio,”—or from one end of Houston to the other, he said, discussing the differences in the population within a single community. To maximize H-E-B’s profitability, a retailer must be nimble enough to offer store formats and assortments that suit the customer. This flexibility has enabled H-E-B to stay in the game when other grocery chains have collapsed due to turmoil in the marketplace.

H-E-B is a corporate sponsor of the Center for Retailing Studies at Mays, so their visit was two-fold: while in the classrooms to teach, the executives from H-E-B were also there to recruit. McClelland invited students from all areas of business to consider a career at H-E-B, as the company has opportunities for marketing as well as supply chain majors and everything in between.

“One of the reasons why we are so committed to Mays is because we have tremendous success with Aggies, more so than people from other schools,” said McAdams. Last year, the grocery chain extended more employment offers to Aggies than all of its other target college campuses combined. This year’s recruitment goals exceed 50 new hires, making Texas A&M and Mays Business School the top university partner for H-E-B.

While not ravaged by literal fire, the U.S. economy faced its own overwhelming challenges last year as millions of jobs were lost, banks collapsed, and the credit market froze. Retailers were hard hit when their customers padlocked their wallets and hunkered down to wait out the economic storm. Many stores closed their doors, permanently.

“Not everyone has a literal fire occur,” said Gallery Furniture’s Jim McIngvale (center), “but we all have met with some overwhelming challenges.”

Mattress Mack refused to shutter his doors, opening a renovated and restored warehouse and showroom just 44 days after the catastrophe. Like Gallery Furniture, U.S. retailers are starting to see advances after a long, hard year. Rising from the ashes as the holiday season approaches, store owners are realizing that the retail landscape has changed dramatically. New tactics are needed to woo customers who don’t shop the same way as they did before the recession.

Those new tactics were the topic of the 2009 Retailing Summit, hosted by Mays Business School’s Center for Retailing Studies, held October 1 and 2 in Dallas. More than 200 people from 62 organizations involved with retailing congregated at the Westin Galleria to network and hear speakers present on the timely theme “Moving forward: innovation and discovery to survive, evolve, and thrive.”

Presenters included presidents and CEOs of major brands such as Home Depot, Nieman Marcus, Olive Garden, and Office Max, as well as authors, analysts, and researchers. Attendees took home valuable lessons about how to improve their business during the recession—and encouragement that there are sunny days ahead in the economic forecast.

“This past year in retail has been like the Mountain Ride at Disney: exhilarating, unpredictable with many twists and turns.”
– Gayle Tremblay, Vice President of Neiman Marcus’ Last Call Stores

Green is good, family is great

Each presenter confirmed that the retailing industry is undergoing a fundamental change. From her position as vice president of Neiman Marcus’ Last Call Stores, summit presenter Gayle Tremblay observes that consumers, even luxury consumers, have a new relationship with money: they are more mindful of their spending in an uncertain future. Retailers will have to stay laser-focused on customer needs and be flexible, she said. What are her customers looking for? She says that family values and eco-friendly initiatives are generating sales currently.

Michael Exstein, a senior retail analyst at Credit Suisse, warned retailers during his address that the business model of shopping malls is no longer viable.

What’s not working in retail? Shopping malls. That’s the conclusion of presenter Michael Exstein, a senior retail analyst at Credit Suisse. With his Wall Street analyst no-holds barred delivery, Exstein said that the business model of malls is no longer viable. There are too many of them and they are too dependent on the productivity of anchor stores. He foresees further consolidation in the retail sector as more and more shopping is done on-line rather than on-site.

But Exstein isn’t down on retail. “Retail is a wonderful business. Fast changing. Exciting. Cyclical,” he says. As for the financial outlook, Exstein sees modest recovery in the fourth quarter of this year. His recommendations to retailers included store regeneration instead of building new stores; looking for opportunities in middle markets (between low end and luxury); and trumpeting sustainability efforts. There is an overwhelming desire on the part of consumers to hear companies talk about sustainability, so retailers must communicate about their green initiatives, he says.

The Home Depot CEO Frank Blake echoed the sentiment that growth will come from existing stores, and he plans to invest in his stores by investing in his people and merchandise. In a casual interview, Blake said his leadership vision places the CEO at the bottom of an inverted pyramid. It’s the people who work in the stores who have the greatest impact on their brand, profit, and business success, he says. To rebuild customer trust, Blake is redirecting the chain’s strategy to emphasize speed, simplicity and customer service that enables “more saving, more doing.” For his female customers, who make up a surprising 49% of shoppers, new lines like Martha Stewart will offer stylishly designed products that make the warehouse environment more welcoming, while expanding the DIY chain into new business categories.

Brand = promise to serve

After all of the shake up of the recession, companies need to reinforce their brands, especially if the brand has been repositioned due to the economy. Stan Richards, founder and leader of the Dallas-based Richards Group advertising agency, advised the audience about his Spherical™ branding technique. With spherical branding, the brand is implemented at every contact point. Relationship marketing, public relations, even the company’s internal communications—their messages must all be integrated with the brand, he says.

The first step to making that happen is to clearly define the business, as well as the brand’s positioning, personality, and imagery or logos. Those branding strategies guide the development of communication plans for each point of customer contact, with the result being a brand that lasts longer than the average company CEO (three years) or marketing officer (less than two years). Clearly identifying the brand vision for internal audiences is as important as external communication, says Richards.

He should know: his company is responsible for highly memorable brand campaigns such as Chick-fil-A’s “Eat mor chikin,” Motel 6’s “We’ll leave the light on for you,” and Fruit of the Loom’s Fruit Guys.

“If a brand promise has easy substitutes among competitors, then the brand is a commodity. Great brands must have a compelling, unique promise, emotional connection, and align and direct the organization’s every decision.”
– Dave Pickens, President, Olive Garden Restaurants

Dave Pickins, president of Olive Garden Restaurants also spoke about brand management, and the unique promise an organization makes through a brand.

“If a brand promise has easy substitutes among competitors, then the brand is a commodity,” that is, a good that anybody can produce without differentiation across the market. “Great brands must have a compelling, unique promise, emotional connection, and align and direct the organization’s every decision,” says Pickins. A brand should differentiate a company from its competitors so that consumers understand the product or service is something you can’t get anywhere else. When you achieve that level of brand loyalty, your customers become apostles for the brand.

Where does a brand come from? Your brand and its promise must be based on inspired consumer insight, says Pickins. For Olive Garden, the brand is all about an idealized Italian family meal. The American public laments the loss of family time he says, so Olive Garden taps into that longing with an emotional connection: shared salad and breadsticks around the table and a boisterous environment make it more like a meal with extended family at home. Employees’ warm and caring demeanor feeds this brand as well. Across all customer touch points, their brand message “When you’re here, you’re family” is repeated.

“The real from the genuine, not the fake from some phony”

Today’s consumers are interested in real experiences and lasting products, says James Gilmore, author of Authenticity: What consumers really want. In an ever more commercialized, intentionally staged, and technologically mediated world—an increasingly unreal world—people want the real from the genuine, not the fake from some phony, says Gilmore. His advice to retailers is to think about experiential ways to improve business by focusing on how you do things rather than what you do. Retailers must engage the consumer’s five senses and create a unique, memorable, real experience.

On a related note, Leonard Berry, Distinguished Professor of Marketing at A&M, suggested that retailers take a lesson from the Mayo Clinic, which is known for it’s high level of customer service and satisfaction. Berry says retailers must manage the three types of clues sensed by consumers which determine the experience: functional clues (technical quality—the product does what it’s meant to do); mechanic clues (tangible and sensory elements, such as cleanliness or store layout); and humanic clues (personal interactions).

At the Mayo Clinic, respect for the patient is one of the highest priorities. That is something vital that is missing from retail today, Berry says. Retailers must value a customer’s presence, time, privacy, self-esteem, and voice if they want to provide truly great service.

“Advertising is the tax you pay for being unremarkable.”
– Robert Stephens, Chief Geek and founder of The Geek Squad

One other thing sets the Mayo Clinic apart: they don’t advertise. Their brand reputation of quality is so strong, they don’t need to. Retailers often have fantastic advertising and horrible customer service, says Berry, and that disconnect is what’s wrong with retail in America today. Retailers must define what great service looks like in their organization, then “major in the minors” by paying attention to all of the details that effect the customer experience.

Sam Duncan, CEO of OfficeMax, argues that something else is wrong in corporate America today, and that is a lack of integrity. His path to the corner office began bagging groceries at Albertson’s. As he moved up through the ranks, he infused the companies he led with his personal values including integrity, accountability, teamwork and trust. He says employees must think about the company and customers first, while applying focus, energy and discipline to all they do. To the students in the audience, Duncan provided a model of servant leadership, where success is defined not by multi-million dollar compensation packages but by “being honest, even when it hurts.”

In addition to the keynote presenters, summit participants shared ideas during break-out sessions and round table discussions on topics such as customer experience; going green and brand image; lessons from the last recession; new retail business models; and best practices in multi-channel marketing, among others.

Rising from the ashes

More than 200 people from 62 organizations involved with retailing congregated at the Westin Galleria to network and hear speakers present on the timely theme “Moving forward: innovation and discovery to survive, evolve, and thrive.”

Jim McIngvale’s story of triumph after tragedy at Gallery Furniture was the high point of the summit for many attendees. One participant said she found his presentation “inspirational and motivating,” as he shared details about how his company has flourished thanks to a corporate culture built on a “never give up” work ethic, and a local community that supported his business in crisis. “Not everyone has a literal fire occur, but we all have met with some overwhelming challenges,” said the participant.

The theme of the summit was that the same principals of perseverance and determination McIngvale shared must be implemented by all retailers in this changing and challenging economy if they are to emerge more vibrant and profitable than ever when the recession is over.

Plans for the fall 2010 Retailing Summit are underway.

When CEOs defraud investors, do they usually see jail time? What is the ultimate cost to the criminal’s career and bank account? These were questions examined by Scott Lee, professor of finance at Texas A&M University’s Mays Business School, in the article “The Cost to Firms of Cooking the Books,” which appeared in the September 2008 issue of Journal of Financial and Quantitative Analysis (JFQA).

The article was recently honored with the Sharpe Award for best paper of the year in JFQA—a recognition that came with a $5,000 cash prize, divided among Lee and his two coauthors Jon Karpoff of the University of Washington and Jerry Martin, a recent graduate of the Mays PhD in Finance program who is now an associate professor at American University.

Lee teaches corporate finance and valuation analysis. His research focuses on the economic, legal, and managerial labor market repercussions of government regulation, along with other corporate governance and agency issues. His articles have appeared in the Journal of Financial Economics, Journal of Finance, Journal of Political Economy, Journal of Law & Economics, and Strategic Management Journal.

Smith

L. Murphy Smith, a professor of accounting at Mays, received the Outstanding Researcher Award from the American Accounting Association, Strategic and Emerging Technologies Section, at its annual meeting in New York City in August 2009. As stated on the award, Smith was recognized “for his extraordinary academic achievements and leadership in research.”

Smith’s research examines topics such as Internet financial reporting, cybercrime, disaster recovery planning, and XBRL, an Internet-based document language that has been adapted for business and financial reporting purposes. Smith has given a number of keynote addresses on international financial reporting standards at academic and professional accounting conferences, including the fall 2008 Council Meeting of the American Institute of CPAs. His work has been cited in various news media, including Fortune, USA Today and The Wall Street Journal. Smith is ranked in the top one percent of U.S. accounting faculty according to number of articles published in leading accounting journals, and ranked second for total articles published regarding accounting information systems.

You are a tax accountant assigned to this task. What suggestions do you give?

How about removing employer subsidized health care and creating a free market regulated individual payer plan? How about an excise tax on entertainment consoles and the use of tanning beds, coupled with tax incentives for fitness equipment, gym memberships, and annual medical exams?

These were a few of the ideas presented by “Team Awesome,” a group of five students from Mays Business School at Texas A&M University that participated in the annual xTax Competition, a national event hosted by accounting firm PricewaterhouseCoopers. The case competition gave students the opportunity to tackle real-world problems while furthering teamwork and presentation skills. Motivated by a shot at up to $10,000 of prize money, plus a few extra credit points in their accounting classes and the chance to hone their skills, students had two weeks to prepare a 15-minute presentation based on the case materials. Judging was provided by a panel of PwC professionals representing small business owners from Dutan.

“It’s a great learning opportunity for the students, but it’s also great for us,” said Stephen Parker ’88, who sees the event as both a recruitment tool and a training ground for future employees. Parker, who served as one of the judges for the competition at A&M, is a partner in PwC’s Houston office and the lead recruiter for his company on the A&M campus.

The partnership between PwC and schools nationwide make it possible for students to shine in a professional setting that would be impossible to recreate in an interview. In addition to the prize money, each student on the top five teams will be awarded an internship at PwC.

Team Awesome placed second out of the 22 teams from Mays to participate in the event at the local level. Of all of the competing states, Texas has the greatest number of participating schools nationwide. The number of teams from Mays is consistently more than 20, which makes its level of participation above average when compared to Baylor’s 17 teams and the University of Houston’s 15. The top team from each of the 37 schools involved in the competition nationwide will have their recorded presentation reviewed by another panel of judges, and the five highest scoring teams will advance to the national competition to be held in January in Washington D.C. Mays students were national finalists in the xTax competition in 2003 and 2004.

“Mays prepares us very well quantitatively for the workplace, but this added something qualitative, something real,” said Brian Williams, a student in the Master of Science in Accounting program and member of Team Awesome.

A unique condition of the case was that each five-person team had to be comprised of two sophomores enrolled in their first accounting class, one junior accounting major, one graduate student at any level and any area of business, and one graduate student at any level of accounting studies. This multi-generational aspect allowed for the expertise of the older students to combine with the enthusiasm and innovation of the younger set. Team members at every level were expected to participate significantly during the presentation, providing all with an opportunity to learn.

The timely issue of health care reform not only helped students to better understand the world around them but, most importantly, the xTax competition showed these aspiring young professionals how they may have a chance to make a difference in the world after graduation.