Published quarterly by UCLA Anderson School of Management
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Developing Supply Chain Diversity: The Value of Vendor Variety to Businesses' Bottom Lines
Supplier diversity, simply put, is good business. For something so seemingly basic, it is not necessarily the most widely-understood management term in the lexicon. Complete article >
Seriously Simple: AMR Project Takes Every Day Fine Dining From the Printed Page to the Pantry Shelf
Diane Worthington had an idea. She wanted to take her existing reputation and move it into a different business setting. Well-known to foodies, she is an expert on California and contemporary American cuisine and the author of nearly two-dozen popular cookbooks. Complete article >
Accessing the Global Marketplace
What does American enterprise giant Oracle have in common with Metra, a New Zealand company that provides weather-related products and services to customers around the world? And what connection do they have to Mobisoft, a Finnish company that offers software solutions for passenger transport through GPS tracking, or Gozzo Impianti of Italy, which operates the planning, engineering and construction of technological systems for commercial construction? Complete article >
She is the First
To visit Sally Choi (FEMBA '06) at work, you must pass through a metal detector while your belongings ride past security guards on a conveyor belt. You are required to wear a visitor's pass and sign in with uniformed personnel, who then direct you to the third floor. There, you are asked to take a seat in the waiting area, and before long, you're led through a maze of staircases and hallways, past seemingly endless rows of cubicles to finally reach her office. Complete article >
Everything, Including House Calls
Raphael Darvish ('04) is medical director of Concierge Medicine/LA (www.ConciergeMedicineLA.com), an innovative healthcare practice he created after receiving his MBA from UCLA Anderson and completing his residency at the David Geffen School of Medicine. Designed to offer truly excellent care with an emphasis on preventative efforts, the program is the ultimate in convenience and attention to detail. Complete article >
Supplier diversity, simply put, is good business. For something so seemingly basic, it is not necessarily the most widely-understood management term in the lexicon. Here is how it is described in "Straight to the Bottom Line" (SBL) by Robert A. Rudzki, Douglas A. Smock, Michael Katzorke and Shelley Stewart Jr., considered a definitive work on procurement and supply-based management by many top business professionals:
"Companies at the leading edge of obtaining value from their procurement practices give serious attention to supplier development and supplier diversity, because it is both good business and common sense. Supplier development is about developing future outstanding suppliers by investing your organization's time and resources today in a mentoring relationship that helps those suppliers understand your business and understand how to become a top-tier supplier. Supplier diversity is often linked to supplier development and introduces the additional perspective of addressing your local community regarding awarding business to companies that represent local demographics and assisting economic development objectives."
So, supplier diversity refers to a firm increasing the number of outside sources it employs to satisfy its needs. A diverse supply chain allows a firm the security of having a variety of vendors on which it can rely for the various products and services it requires. In addition, companies can also choose to work closely with their smaller suppliers to support their efforts. In many instances, as these businesses scale up and do more work with large corporations, they may need assistance in understanding what is needed to adequately meet the demands of both quality and quantity for their clients. Supply chain diversity management is often as much about relationships as it is about variety.
There is a common misperception that often arises in this subject area. When many people first hear the term "supplier diversity," they think of it as something akin to affirmative action -- a program that falls more within the responsibilities of a corporation's foundation rather than its procurement office. This is not the case. Valued unanimously by experts in the field, supply chain diversity is an important business practice, because it has a direct effect on a firm's bottom line, which cannot be ignored by organizations that are concerned about their shareholders. Diversity, as described here, refers mainly to variety, which leads to vendor competition, which in turn leads to better prices, more choices and potentially higher quality. However, making an effort to be inclusive of all types of demographics represented in a company's constituents, including women and minorities, is part of achieving the value of variety.
Beginning to Work Toward Diversity
It is no coincidence that supplier diversity programs began about 40 years ago, as then President Lyndon Johnson's Great Society policies were taking shape. They were originally seen as social programs, but over time, that view has changed. According to SBL (published in 2006), "Over the last 25 years, supplier diversity has become a business imperative for many companies." So much so that it is now common for large corporations to have an entire department dedicated to supply chain diversity. Their purpose is to actively seek out and develop relationships with existing and potential vendors owned by minorities and women. And, yes, corporate spending on products and services provided by these businesses is still a good social strategy, looked upon favorably by the government. However, this is not the primary benefit of interest in supply chain diversity. Instead, corporations understand that women and minorities have greatly increased their own purchasing power, so that doing business with their companies is only logical, since they represent many potential new customers as well.
UCLA Anderson's Senior Associate Dean Al Osborne is a key leader in the world of supplier diversity. When Minority Business News released its inaugural 100 Men Impacting Supplier Diversity list late in 2006, Osborne was included. Following is part of his quote in the magazine.
"I am motivated, because I want entrepreneurs in our diverse community to have a fair shot at wealth creation," Osborne says. "This led me to establish a management training program at UCLA Anderson. Yet, policies that shape opportunities matter, too. So, I write, give speeches and serve on taskforces. Management training and access to capital are critical to the growth and survival of diverse enterprises."
The management training program Osborne refers to is Management Development for Entrepreneurs (MDE). Administered through UCLA Anderson's Harold and Pauline Price Center for Entrepreneurial Studies, the program was first offered in 1990 in Southern California with a Northern California component added five years later. Over 900 graduates with diverse backgrounds now make up MDE's alumni base.
The Perspective of Large Corporations
"All organizations are concerned with having a set of relationships that help optimize goods and services to produce the value customers demand and that help foster customer loyalty at the same time," Osborne says while describing the value of supply-chain diversity. Well aware of the misconceptions about the association with affirmative action, Osborne counters it with a specific example. "At AT&T, half the customers are Hispanic," he says. "It's just good business to have a supply base that is simpatico with that community."
AT&T is a good example. It has been active in supplier diversity for over 40 years. As the company's executive director for supplier diversity, Joan Kerr heads up -- among other things -- a robust outreach program dedicated to identifying and recruiting a diverse group of suppliers for the telecom giant. She and her staff participate in over 90 events a year all across the globe, interacting with prospective vendors. She says her goal is to recognize interesting and diverse suppliers who bring AT&T a competitive advantage.
"Finding companies with better business solutions is critical," says Kerr. "When I look at a business, I ask myself 'Will this company make AT&T's supply chain faster, more efficient and better optimized?' We also constantly ask ourselves 'How can diversity improve our business?'"
Kerr adds that there are other advantages. "Supply chain diversity leads to greater customer loyalty as well," she says. "Our demographics are changing considerably, and our customers appreciate buying their communications products and services from a company that includes diverse suppliers from their communities. Since many of our business and public sector clients are interested in diversity in their supply chains, we are often asked to include diversity solutions in our bid responses. In this way, supplier diversity delivers the advantage of revenue enhancement and sales enablement. Our program enables us to win more bids."
Finally, Kerr explains that showing great community support helps with public policy support. She concludes, "Those suppliers we do business with and diverse community groups are more than happy to speak at city council meetings or in front of regulatory panels and say, 'This is a great company that should be allowed to maximize its operations, since they are investing in the communities where they do business.'"
Another good example is represented by Denise Coley, director for global supplier diversity business development at Cisco Systems. She says Cisco has an internal goal to have expenditures with small, diverse businesses and that "the supplier diversity organization acts as a facilitator of relationships at Cisco." Her department is active with groups that certify diverse businesses and attends annual conferences with these organizations. Every quarter, Cisco also sponsors "How to do Business with Cisco." This is an opportunity for diverse-owned businesses to hear about opportunities at Cisco.
"The opportunities can range from janitorial services or landscaping to promotional products, marketing, advertising, leadership training and transportation," Coley says.
Coley sees the supplier diversity landscape as being in a transitional state. "Now that we have the Internet, access is easier and available for everyone. A small business can be run out of a home or garage and still have a global reach," she says. Coley also believes that the greatest change in the next three to five years in the supply chain is the inclusion of diverse businesses in the global economy. So at Cisco, the concept of relationship facilitation now has a global connotation. "We now encourage our diverse suppliers to accompany us on business missions abroad with diversity organizations and other corporations to meet diverse suppliers throughout the world," she says. "It creates opportunities for them to do more business with each other and for corporate America to create economic wealth and vitality in the communities that they live and work in."
Training that Transforms
UCLA Anderson's MDE program is in the opportunity creation business as well. The curriculum offers both a 10-day certificate program in Southern California at UCLA Anderson in the fall and a four-day certificate program in Northern California's Silicon Valley in the winter. Both offer a wide-ranging series of topics, including organization and strategy, operations, management, marketing and finance. Classes are taught by UCLA Anderson faculty members.
Nancy Duarte, principal of Duarte Design Inc., says the MDE program is "one of the best things that ever happened to me." Duarte Design is a global leader in the production of presentation materials in any media form. Their clients include Cisco Systems, Sun Microsystems, Al Gore, Citrix, Hewlett Packard and Adobe, among many others. Since participating in MDE, she has seen to it that five of her team managers have also graduated from the program. She added for emphasis that "the whole program has transformed my organization."
It's important to remember that Duarte's company was successful before she completed MDE. She says she never experienced a "glass ceiling" and even felt that going through the necessary steps to have the company officially categorized as woman-owned was potentially diminishing. However, "as a favor to Cisco," she spent the money, took the necessary steps and on the advice of Cisco's Coley enrolled in MDE.
At the heart of the MDE program's curriculum is a Business Improvement Project (BIP). It is a strategic initiative designed to add significant value to the entrepreneur's enterprise. UCLA Anderson MBA students participate as teaching assistants, serving as consultants in strategy workshops to help formulate and implement the entrepreneur's plans. It is then refined in the weeks after the academy. (Incidentally, the BIP concept has proved so successful that Osborne uses it in a variety of other Price Center educational efforts, as well.)
For Duarte, her business improvement project enabled her to see the different stages of development in her business and to see the gaps in what she needed to do next to enter the mature stage for an entrepreneurial enterprise. One specific thing she did was institute a new level of management -- middle managers -- so that her senior management team could focus more on strategy. As a result, she says they have learned how to plan and how to treat their departments as their own businesses.
What the Future Holds
What began as social policy and became good -- even necessary -- business policy continues to expand and go global as executives and educators anticipate what is to come. Cisco's Coley notes that more diverse-owned businesses will be included in supply chain opportunities. Kerr of AT&T says that those opportunities are there for international companies to enter the supply chain as well. Whatever is ahead, UCLA Anderson's MDE program will be a part of it.
"The future for us is taking these ideas to emerging countries," Osborne says. "Not just emerging communities in the United States. We are currently in discussions about taking an MDE-type program to South Africa, to the emerging central European countries and even Latin America. We've also been invited to Mexico, where their national policy supports entrepreneurship as an important element in raising standards of living. There is considerable momentum in recognizing the value of this kind of business thinking to enhance the democratization of a society. UCLA Anderson will continue to be a leader in this initiative through bringing the empowerment of business skills and tools to emerging populations."
Diane Worthington had an idea. She wanted to take her existing reputation and move it into a different business setting. Well-known to foodies, she is an expert on California and contemporary American cuisine and the author of nearly two-dozen popular cookbooks. She also hosts an award-winning radio show and serves as editor-in-chief of Epicurus.com, a web site devoted to food and wine.
What all this activity amounts to is national recognition for her expertise, along with a brand -- Seriously Simple -- that embodies her food philosophy. What she didn't have was a way to turn the Worthington oeuvre into a manufacturing enterprise, or more specifically, a line of food products that reflect her creative approach to everyday fine dining.
At just the right time, a mutual friend introduced Worthington to Melissa Lynn ('07). Though they initially met for social purposes, they soon began to talk about Worthington's still gestating idea, what she calls "a lifestyle concept related to food." Melissa immediately recognized that Worthington's business idea would offer the perfect opportunity for her to apply her marketing and entrepreneurial interests to a real world situation. In turn, Worthington would receive recommendations for how to approach her business idea. It appeared to be a win-win arrangement for them both, and the timing could not have been more perfect.
As it happened, when she met Worthington, Lynn was a first-year full-time UCLA Anderson student. Recognizing the possibilities in the author-chef's vision, she brought together some of her classmates -- Stacie Hajduk ('07), Traci Kroeger ('07), Dayna Mintz ('07) and Alicia Weisser ('07). Together they explored the creation of a business framework -- a shelf if you will, on which to arrange the various ideas and products Worthington was considering. This led to the team's first collaboration with Worthington in their business plan course. The results of their class work impressed Worthington enough that she continued the relationship as the sponsor of the team's Applied Management Research (AMR) project.
Taking It to the Next Level
AMR, colloquially known simply as field study, is the two-quarter long, hands-on application of their MBA training that is required of all second-year full-time Anderson students. It's designed to bring them into close contact with the organizational and competitive realities of the business world. Each team examines a specific company, industry and strategic opportunity and then develops written and oral implementation recommendations.
Sponsoring companies range from young to mature, but rarely do they offer the entrepreneurial challenge facing the Seriously Simple team. Unlike the overwhelming majority of their past and present peers, the team started with the earliest stages of developing an enterprise. Their start-up assignment required the passion to pursue a full year's commitment with the unusual process of going from business plan course on into field study with the same project. As a result, they were charged with conceiving what Worthington's potential new business should look like and determining what aspects of their partner's vision would prove viable in the marketplace.
The process began with a series of meetings, brainstorming sessions in which Worthington outlined her notion of creating a line of sauces and the like based on her recipes that would reflect the Seriously Simple approach.
"Diane is extremely passionate," Hajduk says. "She had 25 different ideas and that was one of our challenges. We had to rein her extensive ambitions back in a bit, before we could apply some structure to them."
Though it wasn't necessarily by design, the team members each brought experience with different business specialties to the project. Mintz, for example, was considered the finance expert of the group. However, everything didn't break down into neat compartments, so a true team effort was required with each of them involved in all aspects. Like a standard start-up experience, they all did whatever was necessary from crunching numbers to marketing. They also found themselves immersed in areas none of them were familiar with.
"I feel like I spent half my time with food chemistry," Mintz says. "And that was the best part of the project as far as I'm concerned. We got to really extend beyond our comfort zones into unfamiliar territory like finding test kitchens and forecasting demand for different food products."
The team undertook a series of multifaceted surveys. Not only did they try to unearth what types of products might interest the public, but they also sought to define the gourmet and specialty food market in general. Information about Worthington herself was also important, the group needed to understand the author's image, to see what space she occupied in the realm of epicurean celebrity. The students took advantage of in-house Anderson experts as well, consulting with Carla Hayn, associate professor in accounting and the team's faculty advisor, and Susan Dearing, EMBA career and leadership director, who by a happy coincidence had a prior career in the food industry.
Presenting the Final Plan
This research took most of the winter, and in March, the team formally presented their findings to Worthington. The goal was to recommend the best strategy for launching a specialty food product line. The five team members each took a turn at the lectern, laying out the Seriously Simple timeline, an industry overview, their research strategy, their findings and recommendations, and an implementation plan.
The outlook proved positive for Worthington and the potential for a Seriously Simple line of products. The gourmet and specialty food market is growing, and the most popular segment of it is in the United States, including condiments, sauces and dressings -- which dovetailed well with the direction Seriously Simple wanted to go. There were comparisons of Worthington to other well-known chefs and authors (think Rachael Ray and Emeril Legasse) and analysis of the target consumer (think foodies and casual cooks) and the qualities of the brand (think West Coast sophisticated.)
Ultimately, a series of specific recommendations were made, including the types of products Seriously Simple consumers might be interested in (such as dipping oils, pestos, tapenades, vegetarian spreads, dessert sauces and basics like roasted garlic puree). Customers also favored different flavor choices within each type of product and even exhibited a preference for fewer, yet familiar, easily-pronounceable ingredients.
Kroeger made the link between image and packaging and then detailed a pricing strategy. She noted that consumers liked fancy seals rather than cheap-looking" plastic, but they also expressed a preference for homemade looking labels. Short jars for non-dry products and tins for dry products were preferred, and consumers want them to be able to fit into their cupboards and pantries along with products they already have. Smaller sizes were important to focus groups, because they wanted to try the foodstuffs before committing to purchasing large quantities. Pricing was also field tested, including store visits, and it was found that Seriously Simple faced tough competition in this space.
"Since consumers are going to have so many options," Kroeger says. "We feel it is really important to price relative to these competitors, so the $8 to $12 range would be most appropriate for Seriously Simple products."
The end goal for distribution was specialty stores like Trader Joe's and Whole Foods. But to get into those locations, proof of sales must be shown. With this in mind, the Seriously Simple team strongly recommended that Worthington take the products to various farmers' markets where flavors, packaging and pricing could be tried out and where customer feedback is immediate and easily obtainable.
The final portion of the presentation was the five-phase implementation plan, which was handled by Weisser. The first phase was the creation of the business plan, which was taken care of the prior year. Phase two, creation of the product line, was the core of their AMR project. The next step would be the creation of the actual products for use in phase three, the farmers' market test runs, which was expected to require six months. Phase four would be co-packing the products to help with packaging and distribution, requiring someone with the same attention to detail and quality standards as Worthington. The fifth and final phase would be securing a strategic partner.
"Before we can attract the right partner, we have to have a really firm value proposition to offer," says Weisser. "With a proven track record of sales for a desirable product line and strong branding, potential partners can be successfully approached."
Continuing the Working Relationship
When all was said and done, Worthington called her AMR experience one of the most incredibly invigorating of her working life and credited the team as wonderfully compatible working companions. Unfortunately, despite her effusive praise, you won't find any Seriously Simple products on your favorite store's shelves any time soon. After digesting the group's presentation and the accompanying report, Worthington eventually decided to seek out a partner with whom she can launch a line. She realized that it would be an enormous commitment of time and money, noting that she was also releasing a new book, "Seriously Simple Holidays," at the same time.
"I'm still very happy that I went through the process," Worthington says. "You have to do all the right work and have all the right information to be able to make an intelligent decision. And I had a great team who were absolutely driven to do their best for me. Participating in an AMR field study project is a wonderful opportunity for any small business owner."
As for the team, they've since graduated and gone their separate ways with new post- MBA careers. (As a matter of fact, two are working in the food industry, Lynn at Kraft Foods and Hajduk at Del Monte Foods.) However, Hajduk says that the group still feels they have a vested interest in Seriously Simple. Mintz adds that they maintain contact with Worthington, who has come to them for advice and feedback outside the scope of their original work. Both sides value the ongoing working relationship that was forged during the project, and only time will tell where it will ultimately lead.
What does American enterprise giant Oracle have in common with Metra, a New Zealand company that provides weather-related products and services to customers around the world? And what connection do they have to Mobisoft, a Finnish company that offers software solutions for passenger transport through GPS tracking, or Gozzo Impianti of Italy, which operates the planning, engineering and construction of technological systems for commercial construction?
Though these different companies may seem completely unrelated, as well as far apart geographically, they all came together at UCLA Anderson on July 27, 2007, to participate in the opening weekend of the annual Global Access Program (GAP). Each of 33 early-stage technology-based companies sent representatives to take advantage of the opportunity to engage a team of third-year Fully Employed MBA (FEMBA) students as professional consultants. For these students, GAP participation is the culmination of their MBA experience, where all their newly acquired skills and knowledge come together in international real-world application. Working with key company executives, they address the most critical strategic challenges facing each organization and develop comprehensive strategic business plans to effectively address the issues.
A Specific Case Study
A case and point is YouMail, a cell phone voicemail service that allows subscribers to individualize their greetings for missed calls. Based on caller ID, it allows each caller to hear a unique customized greeting. In 2006, the company (a spin-off of Zeacom, a New Zealand-based company that develops Unified Communications application software solutions) engaged a GAP team as part of its efforts to gain funding to launch its program in the United States. Zeacom's founder, Miles Valentine, had earlier met GAP leaders, Bob Foster, GAP director and UCLA Anderson adjunct professor of decisions, operations & technology management, and Elwin Svenson, GAP executive director and UCLA vice chancellor emeritus. GAP has a long history of working with businesses from New Zealand, as well as those from five other foreign countries.
George Greenberg (FEMBA '07), manager of finance and business planning for the Walt Disney Internet Group, was one of five students who worked on the YouMail project (along with fellow classmates Giri Damerla, Amit Jain, Amir Rao and Sharad Varadarajan). Here's how he described the project as first presented to his group.
"They came to us saying, 'Here is what we have. Can we do something with it for the cell phone market in the United States?'" says Greenberg. "Essentially, YouMail had a concept and wanted to know if it was a business. They needed to determine if there was a viable market for the product and whether or not they could make money with it."
Getting to the Heart of the Matter
Every GAP project has a significant primary research element and concludes with an "investment grade strategic plan" -- a business blueprint of high enough quality to be capable of being successfully presented to angel investors and venture capital firms. Miles Valentine, chief executive officer of Zeacom and chairman of YouMail, says the greatest benefit for the company was the extensive and focused primary market and product research the group provided.
"Both the initial and later the secondary research conducted by the students proved crucial in identifying the key elements needed to effectively structure the project," says Valentine. "The primary research found some interesting things about function and usability. For example, a major discovery was that one of the barriers to adoption in the United States was how we program call forwarding. It required putting a 14-digit sequence into the phone and then sending it out, and we had to create this type of system for a wide-range of phones."
The GAP team found exactly where users were getting stuck, examining what worked and what didn't, and determined a suitable solution to the problem. They talked to customers to see what was acceptable to them, what they would and would not do. The result, according to Greenberg, was that many of the fundamental ideas and strategies on how best to create a value offering to the customer, position the product, expand its features and ultimately generate a tremendous business was a direct result of their team's work or brainstorming in conjunction with the company's team. He says that together they came up with totally new and different ways to approach and best capitalize on the patent-pending technology. Armed with this new understanding and the resulting strategy, YouMail sought funding, but it still had some obstacles to overcome.
Attracting More Than Interest
"It was a wireless Internet play, even though it had all sorts of social networking potential," Greenberg explains. "Everyone in the investment community had been burned by the dot-com crash, and Zeacom's board of directors was skeptical about dedicating resources to YouMail."
Despite these concerns, the YouMail business plan passed its ultimate test as GAP's Foster explains, "Only three months after the December presentation in the spring of 2007, YouMail raised $1.8 million in capital from the Tech Coast Angels, the largest angel investment group in the United States in terms of number of members (over 300). Not only did they raise the funds, but two members of Tech Coast Angels joined YouMail. Founder Luis Villalobos became a member of the board of directors and recruited an experienced serial entrepreneur, Alex Quilici, to become the company's chief executive officer. Both the funding and personnel moves demonstrate the considerable confidence generated by this great GAP success story."
Gratifying results like these don't happen by accident. FEMBA students are full-time working professionals who are well prepared for their final field work in GAP. In addition to the rigorous first two years of the curriculum with elements of both theory and practice, students begin their hands-on learning experience during the summer prior to conducting their primary research. GAP projects are entrepreneurial in nature, requiring students to be prepared to create a business from its earliest stages. So they master disciplines such as business plan writing, secondary and primary research methodology and how to interact with technology based international companies.
The World-Wide Workplace
Greenberg considered the international aspects of GAP a key component with significant benefits, pointing out that students have the opportunity to meet with many different global groups, not just those associated with their particular project. For example, he recalls students meeting with various trade ministries and participating in networking events with government officials, including the consul general of New Zealand in his case, as well as one of the other team members meeting the deputy governor of New Zealand's Reserve Bank during their visit to New Zealand.
As a result, GAP's international reputation continues to spread throughout the global marketplace, through participants like YouMail's Valentine, who recommended the program to two of the companies with GAP projects for this year. He also considers having a U.S.-based partnership vital to any enterprise from elsewhere in the world that hopes to compete in the coveted U.S. market.
"I think it's an outstanding experience, especially for an entrepreneurial company that is just getting started," Valentine says. "The team's diligence astounded me, and they not only worked very hard, they worked very smart. The resources they provided for a relatively low fee ($12,500) were impressive. You'd pay a hundred thousand dollars for a commercial consulting firm to do the same work."
To visit Sally Choi (FEMBA '06) at work, you must pass through a metal detector while your belongings ride past security guards on a conveyor belt. You are required to wear a visitor's pass and sign in with uniformed personnel, who then direct you to the third floor. There, you are asked to take a seat in the waiting area, and before long, you're led through a maze of staircases and hallways, past seemingly endless rows of cubicles to finally reach her office.
All of this is standard procedure for Los Angeles City Hall, where Choi is the deputy mayor for finance and performance innovation. At the time of her appointment, she received more than the usual attention from local press, especially outlets targeting Asian constituencies. She is the first Korean-American woman to become a deputy mayor for the City of Los Angeles. In her news making new role, Choi has duel responsibilities. On the financial side, she prepares the city's $6.8 billion budget for Mayor Antonio Villaraigosa. She says the greatest challenge is making sure the city remains on a fiscally responsible path while making vital investments. She explains that the budget still has a structural deficit due to revenue shortfalls from 2001, when the fallout of the dot-com bust and 9/11-related terrorism issues left Los Angeles with less than projected income. In addition, the current cooling of the once white-hot real estate market is cutting into revenue growth as well, intensifying the challenges facing Choi and her staff.
"We're required to present a balanced budget every year with the goal of expanding some programs and critical services while reducing the structural deficit at the same time," Choi says. "That requires emphasizing efficiency, and answering the questions of how we can work smarter and make sure to find the best uses for taxpayer dollars."
Mayor Villaraigosa's main budget priority has been public safety and reducing crime. He has a goal of adding 1,000 net new police officers over five years, and the city is committed to adding 780 of those officers this year. Choi says that is a top priority in the budget, but even the police department wasn't exempt from finding efficiencies for their operations.
The budgeting process is complex. Choi works closely with the City Administrative Office during budget preparation. Villaraigosa then submits the results for scrutiny by the city council's budget committee, and Choi presents the details and reasoning in their hearings. Then, it's back to the mayor, who can accept the council's changes or veto them, followed by re-submissions until agreement is reached. As a result, the mayor's fiscal year 2007-2008 budget was unanimously approved by the city council. Choi explains that it puts more police officers on the street, works to reduce gang violence, promotes youth development and cuts the deficit while protecting the increases in basic city services.
The other side of Choi's responsibilities relates to the performance management unit, which is a concept implemented by Villaraigosa and modeled on strategies employed by then British Prime Minister Tony Blair. There is a set of objectives with desired outcomes that Choi likens to a strategic plan for Los Angeles. Under each of the six focus areas with 26 outcomes, there is a set of objectives and initiatives to meet those goals. For example, in the focus area of energy and the environment, the mayor's goal is to generate 20 percent of total energy used by the city from renewable resources by 2010.
"All of it is monitored by our group," Choi explains. "My team evaluates each plan and tracks the progress. Many are ambitious goals with both performance and fiscal metrics, which we track as well."
Prior to joining the mayor's team, Choi served as assistant general manager for the city employees' retirement fund, where she helped manage about $10.1 billion dollars in assets (the fund is now approximately $11.1 billion). She continued to work there while a student in UCLA Anderson's Fully Employed MBA (FEMBA) Program, having decided to earn the advanced degree to increase her career opportunities and enhance her management skills. Joining the mayor's office just months after completing her class work at UCLA Anderson, she says the leadership training she received was called upon immediately.
"My Anderson experience gave me the confidence to lead change in a large organization," Choi says. "It taught me different ways to generate ideas for creative problem solving and to think more strategically, and it helped me to become a more effective leader."
Raphael Darvish ('04) is medical director of Concierge Medicine/LA (www.ConciergeMedicineLA.com), an innovative healthcare practice he created after receiving his MBA from UCLA Anderson and completing his residency at the David Geffen School of Medicine. Designed to offer truly excellent care with an emphasis on preventative efforts, the program is the ultimate in convenience and attention to detail.
The business model is simple. An initial consultation is required to ensure the practice is the right fit for each potential client, but once accepted, there are no deductibles or co-payments, just a flat annual fee. That is, comprehensive primary care is provided without insurance hassles (though patients are still required to carry insurance for medical needs that are not covered). Benefits include but are not limited to 24/7 physician cell phone access, complimentary valet parking, and perhaps best of all, weekend and evening unhurried appointments with no waiting. Gone is the need to bide time reading old magazines, because appointments are spaced throughout the day to eliminate overlap.
A fourth-generation physician (his father is a partner), one of Darvish's goals when he formed Concierge Medicine/LA was to achieve a slower pace so that he could get to know his patients well and really listen to them. He sees only eight or nine patients a day, and his father sees fewer still.
"In a standard medical practice, an appointment lasts 10 or 15 minutes, and many doctors limit their patients to one problem at a time," Darvish says. "Patients don't get a chance to talk about everything they need to discuss."
Darvish's patients not only get all the time they need, they receive thorough evaluations. The centerpiece of the program is the Presidential Physical, a comprehensive exam which Darvish created to mirror the chief executive's annual check-up, based on details he received when he contacted the White House. The practice also has established an extensive network of relationships with top specialists across the country and around the world to ensure easy referral access whenever it is needed.
As you would expect, Concierge Medicine/LA's offices in Brentwood, Calif., are equipped with an array of the most advanced diagnostic equipment, as well as an x-ray suite, which includes a darkroom. However, their examination rooms are also outfitted with flat screen television sets. The facilities are quiet and decorated to emulate the relaxed atmosphere associated with visiting a spa.
It might seem that affording such service would not be within the financial reach of many. However, Darvish insists his program is not intended only for those who are wealthy but for anyone who values their well-being. For those under age 35, the cost of the program is $1,750 per year. For those 35-49 it's $2,400, and those over the age of 50 pay $2,900. Darvish considers it a small price to pay to have a doctor doing everything possible to help you achieve and maintain good health. He also notes that those with means won't hesitate to spend a similar amount on a designer handbag or suit. He adds, "If you don't have your health, you can't enjoy the things money can buy."
Currently, Concierge Medicine/LA has about 450 patients, which Darvish estimates is about half what the three-doctor office can reasonably serve. (An associate physician completes the team.) He believes they will reach their maximum in one to two more years. At that time, the partners will consider expanding to other neighborhoods with business districts, like downtown Los Angeles or Century City, since many of their clients are corporate executives.
Darvish says his Anderson MBA experience was essential to developing his ability to create and expand the company. He cites the emphasis on an entrepreneurial perspective, as well as the financial knowledge and marketing skills he acquired, as useful on a daily basis. He says he keeps the pyramid he was taught to use by Eric Flamholtz, professor of human resources and organizational behavior, close at hand for continual reference.
"Building a medical practice, like any other business, takes patience and perseverance," Darvish continues. "You develop an understanding of the long-term nature of this commitment in business school. I treasure my Anderson education for giving me the tools to launch Concierge Medicine/LA, enabling me to positively affect the lives of all my patients."
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