Winter 2005


Assets
Published quarterly by UCLA Anderson School of Management

Putting It All Into Practice

UCLA Anderson: Unplugged

There is something in the air at UCLA Anderson. It's "wireless," the current trend in Internet-connectivity, and it allows laptop users to surf the Web or check e-mail without a hard wire connection. Complete article>

Making a Difference in Children's Health Care Oracle CEO Jeff Henley: Distinguished Alumnus and Global Business Leader

Jeff Henley demonstrates the thoughtfulness and vision he brings to his post at one of the world's most successful companies, and offers his thoughts on a wide range of business and economic issues. Complete article>

Story Musgrave

Mission Control: Bringing Management Down to Earth

Story Musgrave ('59) fixes things. It's what he does. It's what he's always done. As a boy growing up on a farm, he fixed equipment so the farmer could get the job done. Complete article>

Parker CMC

The Parker CMC and the MBA Today

An improving economy, coupled with a renewed attitude of partnership and mutual support among UCLA Anderson MBA students, alumni, faculty, administrators, corporate partners and the staff of the Parker Career Management Center has resulted in one of the strongest employment years in quite awhile. Complete article>

 

UCLA Anderson: Unplugged

There is something in the air at UCLA Anderson.

It's "wireless," the current trend in Internet-connectivity, and it allows laptop users to surf the Web or check e-mail without a hard wire connection, such as DSL or a phone line. The system was designed and installed earlier this year by 5G Wireless in close cooperation with UCLA Anderson's technical staff.

"The biggest thing that wireless brings to the table is the lack of a ‘tether' to some specific location - it's convenient," says Anderson's Network and Security Manager Eric Crane. "More and more people are starting to take advantage of the network and, as with many conveniences, some will soon find wireless connectivity a necessity."

Wireless access technology is not required for UCLA Anderson students, but anyone walking across the quad or sipping a latte in Espresso Roma will find anecdotal evidence that it's a benefit most MBA students readily embrace. Its recent implementation represents some of the best qualities that define UCLA Anderson: the desire to meet students' needs, a willingness to explore and test new technology, and an ability to seek and develop unique solutions to specific requirements, all while casting an efficient eye on the bottom line.

A Little Help from our Friends
Crane and the school's IT staff had been researching wireless applications for some time prior to 5G's involvement. But early tests indicated that an Andersonwide system would have required the installation of some 50-70 wireless devices, which was not practical from a cost or maintenance perspective. And in light of ongoing budget constraints, this useful-but-not-necessarily-essential piece of technology was not a high priority for the school.

It wasn't until members of the Class of 2003 offered to contribute financially to the wireless project that Crane began to see it as a reality. Then, 5G, essentially a start-up in the wireless space, eagerly signed on to tackle the challenges posed by Anderson. Ultimately, the Class of 2003's school gift, funds from the dean's office and 5G shared the cost to install the system.

5G's strategy was to develop a technology with much stronger access points than its competitors, says Doug Fox, director of business development at 5G. "This means reduced complexity to the network, reduced network management and reduced installation costs," he notes.

For Anderson's Crane, it meant a mere handful of access points to cover the complex, instead of the dozens required by rival technologies. Four 5G access points now dot the Anderson campus: one on the roof of Gold Hall that provides most of the coverage, one in Korn Hall where the hundreds of potential users require a strong signal, and two in the Rosenfeld Library, where the reinforced, load-bearing structure necessitates stronger signals still.

The UCLA Anderson solution required yet another level of sophistication to make it work for all campus constituencies, particularly faculty. In order to ensure students' rapt attention during class, faculty requested that wireless technology be deactivated inside the classroom, as necessary. To that end, 5G created an in-class silent radio broadcast with the ability to "drown out" waves coming from an outdoor access point. Thus, individual classrooms could be turned on and off from the inside without disrupting users elsewhere in the complex.

Maintenance and Security
At UCLA Anderson, the testing, installation and maintenance of the system falls on the entire ACIS team. Crane's network and security crew handled the testing and installation and now manage system maintenance. CS Response was involved in the testing and now is responsible for user support at the laptop level.

Wireless Internet requires more than just good coverage. It also requires sophisticated security to prevent signal theft and protect users' privacy. UCLA Anderson's own programmers wrote custom codes for the system, particularly as they relate to security. As a result, Anderson's wireless service can only be used by those with a Bruin Online account and a VPN server that encrypts conversations.

While growing in popularity, wireless technology is still a bit of a nice-to-have, as opposed to a have-to-have for b-school students. But its activation on campus demonstrates Anderson's commitment to serving its students while maintaining a strict bottom line, says Dean Bruce Willison.

"We were not able to spend a fortune on new infrastructure, and because we have public ties, this was going to be a one-shot deal - we wouldn't get a second chance," he points out. "Our IT team and 5G made it happen; they addressed everyone's requirements for the project. Now we have an infrastructure that is leading-edge, that will keep up and meet the needs of our students and faculty down the line."

Oracle CEO Jeff Henley: Distinguished Alumnus and Global Business Leader

In the past decade, a handful of companies have emerged as new benchmarks for The Business of America. Replacing such venerable institutions as GE, IBM and General Motors are a contemporary breed of multi-national corporations. Viscerally,"strong and stable" has been replaced with "bold and future-oriented" as Dell, Microsoft and Oracle take their place in the cultural lexicon.

Jeff Henley ('67) was named last year as Chairman of Oracle, ascending to the post after 13 years as the database giant's CFO. He also is the receipient of UCLA Anderson's 2004 Outstanding Alumnus Award. In this issue of Assets, Henley demonstrates the thoughtfulness and vision he brings to his post at one of the world's most successful companies, and offers his thoughts on a wide range of business and economic issues.

Q. First things first, what role does management education play today, as institutions seek to provide the human capital that will drive business here and abroad?

A. I think one of the reasons America is a leading economic power is because of its higher education in business and the sciences. International students come to the United States for technology and business training. It's been true for Japan and Japanese students for years; now, you're seeing it more and more I with other countries, such as India and China.

International students learn good business management - things like asset allocation - and they apply these lessons to their businesses back home. As these things helped the American economy, they also help foreign economies. I view [this] as a good thing. We're helping the world become a more rational place by exporting quality economic ideas.

Q. So, what about the globalization of U.S. corporations? Are you as concerned as some seem to be about job outsourcing?

A. It makes people nervous to see jobs moving offshore to countries like India and China. But, of course, jobs have been moving overseas for decades, only now we're seeing new types of jobs going to other countries - things like call centers and IT jobs. But there is a diversity of jobs in the United States and no one knows what future jobs are going to look like. I don't think there is a danger of all our jobs going to India.

People fear the unknown. When I was in business school, the great fear was automation. That was pervasive in the '60s. We wondered what people would do when their jobs became automated. A hundred years ago many Americans worked on farms, and there were fears as industrialization eliminated farming jobs. But the great thing about the American economy is that it is constantly evolving. We find new jobs - whole categories of new jobs - in new industries. One thing America does well is that it keeps reinventing itself.

The movement of jobs offshore raises the living standard in countries like China and Brazil and as the living standards go up [the citizens] become consumers of American products. In the 1960s Japan was relatively poor, but as their GDP on a per capita basis went up they became some of the biggest consumers and biggest savers and investors. It is great for underdeveloped countries; it lifts their GDP and helps us export goods.

Politicians fan the flames of fear. Is there any cause for concern? Of course, if you've lost your job, you have a reason to be concerned. People need retraining and education during their lifetimes, so they can find new jobs.

Q. In the past, corporations touted their stability. Today, while stability is important, being on the cutting edge seems equally essential. What's the key to staying one step ahead?

A. Standing still is a risky strategy. I'm a believer in new marketing, new products. It's especially true in technology but I think it's true in any business. You need to listen to your customers; you need to know all about your competition. That's the way the world works.

That's one area where business school really helps: learning to look at the underlying elements and how to consistently evolve your strategy. We're constantly grappling with ways to stay ahead and evolve.

Q. We've heard you speak about how changes in the corporate culture of Oracle helped improve the company. How does something "intangible" like culture impact something "tangible" like the bottom line?

A. Oracle is a global company and we decided that in all of the countries, in all of the divisions, we would do things the same. The same best practices, same data storage. By changing the culture and going to a uniform model, people had to accept that everyone would be doing things the same way and we would work together for best practices.

Interestingly, a lot of Oracle's customers are doing that now, it's a trend and it's more efficient from an information standpoint. The issue is a lot of employees rebel; they don't think it is possible. People need to accept that they can operate differently. More and more we're going to see centralized business models.

Q. Andrew Groves wrote Only the Paranoid Survive and you've quoted him before. Do you believe that's true?

A. I really believe it. It's particularly true in technology where there can be abrupt changes. One danger is not adapting to change; when a competitor gets ahead, you have to be really careful.

There is a global threat as well. We're going to see more software companies in India and China. You can never be complacent. It's a wonderful way to think about things. Complacency is the kiss of death. There are several companies that are not around anymore or have gone through a downgrade because they couldn't stay ahead. Reinvention is inevitable.

Q. Finally, what did winning the Distinguished Alumnus Award mean to you?

A. When you reach a certain point in your career and your life achievements, you receive some recognition in the business community - you get a title and you get recognition from your school. Everyone enjoys being recognized. It's an honor. But it's good for UCLA Anderson, too. Over the years they'll be honoring a lot more people. The program is great, they're bringing in good people and they're getting good skills and training. Over the next 30-40 years a lot of UCLA Anderson alumni are going to rise to the top. There's going to be lots of CEOs, lots of chairman of the boards who come out of UCLA Anderson School of Management.

Mission Control: Bringing Management Down to Earth

Story Musgrave ('59) fixes things. It's what he does. It's what he's always done. As a boy growing up on a farm, he fixed equipment so the farmer could get the job done. As a surgeon in the operating theater, he fixed the human body, restoring health to his patients. As one of NASA's most experienced astronauts, he has flown into space six times, stepped out into the abyss and fixed the Hubble telescope, used by scientists on Earth to explore the heavens above.

Story Musgrave has fixed countless things over a long and varied career. And he shared a number of lessons learned along the way with Anderson MBAs during the annual Alumni Weekend Conference (October 15-16). Musgrave framed his presentation around essential themes relative to space exploration: "have a mission spirit," "expand your horizons" and "never forget the team." While such advice also can be applied to a new business venture or a shift in corporate direction, it is apparent in listening to Musgrave that he is referencing something even deeper and more personal. This man's mission emanates from the heart. His business plan begins with a spirit of adventure, a wellspring of curiosity and a desire to explore new avenues, to embrace new opportunities.

"You have to learn to feel perfection in the moment," Musgrave told the crowd in Korn Hall, as he referenced a video image of himself floating in the black void of space. "If you've got a job to do, and you do it according to a plan, you no longer need to focus on the result. It takes care of itself."

Attending an Alumni Weekend session led by a CEO or a scientist, by a professor or a professional, a commonality among the practical precepts expounded from the podium would emerge. But even more striking would be the visceral connection between speakers: the energy and enthusiasm, the smarts and the spirit. Taken as a whole one could conclude that the maxims adopted by Musgrave during his 30-year tenure at NASA bridge the gap between art and science, between personal philosophy and real-world application. Story's story may be set against the backdrop of deep space, but his experience is grounded in specific principles practiced by key management experts on land.

Have a Mission Spirit
When you think of the International House of Pancakes chances are you think of, well, pancakes. Or maybe two eggs, over easy.

In a word, you think: breakfast. Which is the same thing hundreds of IHOP franchisees thought every afternoon when the tables were swabbed and the schedule was cleared for a round of 36 holes at the local golf course. As a group they saw themselves as "just a bunch of wealthy cooks," according to Julia Stewart, president and CEO of IHOP Corp. "And they owned breakfast." But they didn't do dinner. Or lunch for that matter. Stewart set out to change all that. The newest member of UCLA Anderson's Board of Visitors took the reins at the family dining chain after successful runs in executive positions at Applebee's International, Inc. and Taco Bell Corp., among others. The food service veteran was determined to take what she knew about the restaurant business and apply it to a new challenge: she wanted to revitalize the IHOP brand and grow it beyond breakfast.

"And I wanted IHOP to be number one in the family dining business," Stewart says.

So she did what Musgrave says all successful astronauts do. She created a plan, studied the plan and got the job done according to the plan.

First, Stewart infused the corporation with liquid cash by revising the outdated system through which franchisees bought into the business.

"For years, all of our money had been going into building restaurants, not building the business," she says, describing IHOP as a benevolent banker that had been missing an opportunity to maximize its assets in family dining. "So we made a change. We decided to let the franchisees finance the cost of acquiring land and building buildings." And her team would focus on the brand.

Advisers balked at Stewart's initial effort to turn the financial piece of the IHOP equation. But with more than 30 years of restaurant industry experience in her court, Stewart was confident that a new business model was the right move for the company.

"When the banker said to me, ‘This will never work,' I had the courage to say, ‘It will work and this is why,'" Stewart reflects. "I knew he was the best and smartest banker. But he didn't know the restaurant business or the IHOP brand as well as I did."

Expand Your Horizons
Once she had the new financial model in place, Stewart undertook what she describes as the more challenging obstacle: an overall cultural shift among the network of IHOP restaurant owners and the employees who worked for them.

Flush with cash now, she told her franchise owners she would undertake a huge national marketing effort to grow the business, first at breakfast and then beyond. She had to sell them on the concept that this was the future for IHOP, that change was necessary if the brand was to continue to grow.

"It was not easy to convince successful restaurant owners with a proven model to renovate, remodel and spend," Stewart says of a task that would require attention to issues ranging from the menu to the interior design of the restaurants themselves. "Some were satisfied with the status quo but I wanted to challenge them - to raise the bar."

Stewart got the franchisees' buy-in by living up to her word. Step by step, she put the strategies in place that would reenergize the IHOP brand, achieve operational superiority and maximize development nationwide. Her team introduced new technology, created training videos in English and Spanish, rid the company of operators that were below IHOP's standards and invested in a national media campaign. The strategy is working, as IHOP reports strong growth in comparable sales since the shift in 2003. In the first quarter of 2004, the company reported its highest increase in comparable sales in nearly a decade.

Stewart's experience speaks directly to one of Musgrave's points: that one should be wise to the connections (apparent or not) that exist from position to position on one's resume.

"If you develop a talent, you'll be able to apply it in any situation," he says of his own ability to repair everything from a combine in the field to a telescope in zero gravity. "It's important to recognize what relationships and principles are inherent in everything you do."

For Stewart, those inherent elements are an ability to communicate, market and manage, and to impact, influence and lead an organization to realize her vision.

"My goal was to convince the franchisees that the change I wanted them to make was the right thing for the brand," Stewart says. "And I learned that these are smart business people; if you offer them a return on their investment, they will come."

Fellow Alumni Weekend keynoter Jeff Henley ('67), the 2004 winner of the UCLA Anderson Distinguished Alumnus Award, echoes Stewart's sentiments about the challenges of revitalizing a brand both internally and externally. As chairman of global software giant Oracle, his experience mirrors Stewart's in one respect: coping with cultural shifts.

Reflecting on his early days at Oracle, Henley notes how the reinvention of the software company's image was key to its ongoing success. "In the early '90s, things were very fast and loose at Oracle," he says, just as things were fast and loose throughout the Silicon Valley. "We had a bad reputation in the market and we had to send a message; we had to clean up the company."

Oracle recruited seasoned professionals from such companies as IBM, Microsoft and Hewlett Packard and set about creating "more standard business practices." Ultimately, with the release of its Version 7.0 of Oracle software, the company reclaimed dominance in its field. Today, Oracle is the world's leading supplier of software for information management, and the world's second largest independent software company.

Make Big Leaps
Though fans of the Ouija would disagree, it is safe to say that none of us can tell the future. But anticipation of the future and reacting properly - with speed and accuracy - is one of the most important skills in today's business environment.

For astronaut Musgrave, the leap into the abyss may be a literal one, fraught with life-anddeath drama, but for entrepreneurs, particularly those in the technology business, the proactive leap into the unknown, however theoretical, can be just as dramatic.

"In the technology business there are three things you worry about: customers, competition and cost, but you always worry about the Big T: Technology," Henley points out.

As the '90s progressed, the Big T got even bigger, as the Internet and e-business evolved into serious forces to be reckoned with. The problem for many - actually, most - was understanding those forces and reacting accordingly. "The road is littered with those who lost their way," Henley says.

At Oracle, then CEO and Chairman of the Board Larry Ellison made a bold decision. He realized the Internet and other new technologies were rendering the client-server model obsolete; central servers and databases were becoming much cheaper. Obviously, this foresight had an enormous impact on a company whose core business was database technology.

"Larry is a technical visionary, but the real thing is his business strategy," Henley says. Oracle was one of the first companies to make its business applications available through the Internet - a concept that is pervasive today. "You have to always be thinking about what's coming next, and you make mistakes of course, but the key is to get a few trends right. The Internet is one place we got it right."

As Henley relates it, Ellison's vision for Oracle transcended the technical; it went straight to the heart of how the company conducted its own business. At one time, Oracle was based in about 70 countries across four different divisions. All operated more or less independently, with an emphasis on local control.

"We wanted to get all the data in one place," Henley recalls. "We were a database company and we couldn't even control our own data. So we took all 70 countries and all four divisions and started having them do the same things we were doing in the United States."

At first the regional managers responded with skepticism. In short, their egos were bruised, and Ellison soon realized they were clinging to local practices purely out of defiance, Henley says. Ellison repositioned the transition as a way to remove the corporate drudgery on the local side and he ultimately succeeded in centralizing Oracle's finance, IT, human resources, legal and marketing functions.

The example set by a centralized Oracle then served as the model for their own customers - entities using Oracle databases to centralize themselves.

"It was a fascinating period and we proved that we practice what we preach," Henley says.

Never Forget the Team
Anderson BOV member Dan Bane, CEO of specialty grocer Trader Joe's, also practices what he preaches, with the specific intent to create a corporate culture that will attract and retain long-term employees and customers to this "national chain of neighborhood stores."

Though each grocery outlet retains its own character and local charm, the employees share one singular vision that comes down from the top: Integrity.

"Integrity is the top core value in the corporate culture," Bane says, "and stating that it is the No. 1 value makes a big difference."

Trader Joe's is known for selling unique, high-quality and often exotic foods at a reasonable price. Like IHOP's Stewart, Bane stresses the importance of knowing one's customers and not taking their likes and dislikes for granted. Buyers follow a tight knit manual that outlines the Trader Joe's philosophy when it comes to choosing products. Perhaps more significant is that a huge portion of the Trader Joe's marketing budget is invested in a customer demo program, as opposed to massive media buys. Shelves are stocked with "pre-approved" product that has been tested and tasted by regular shoppers, not just the buyers. Customers are invested in the end result, ensuring a level of cult-like loyalty that is lacking in other grocery chains.

"We are a product-oriented company, while some retailers focus on other things: being logistics- oriented, for example," Bane says.

The company also is people-oriented, he adds. "Trader Joe's has a vibe, a very specific vibe. It's important that we create a ‘wow' experience for the customer; to let them know we care they're there."

Corporate executives work to let the store employees know they care, as well. They dress in Hawaiian shirts and don nametags - just like store employees - to demonstrate their willingness to help out on the floor when necessary.

"Employees know this and it jazzes them up," Bane says.

Henley's experience at Oracle also shows that employees respond to leadership that thinks the way they do.

"It is most important that a CEO of a technology company should be someone with technology in their bones," he says. "What most technical companies lack is technical leadership and technical vision. The real thing that saved Oracle? We got the product right."

IHOP's Stewart has experienced a similar phenomenon in the restaurant industry. "People have started to work differently," she says of the cultural shift she initiated. "They're re-energized. People know that I want to be No. 1 in the family dining business and they want to be with a winner."

Simple stuff, but it demonstrates one of the lesson's Musgrave was most intent on sharing with Anderson MBAS during Alumni Weekend.

"Surround yourself with people - people who are better than you and listen to them," the NASA veteran says. "You can't log 18,000 flying hours and complete 600 parachute jumps without a team to support you. I never forget my team."

The Parker CMC and the MBA Today

An improving economy, coupled with a renewed attitude of partnership and mutual support among UCLA Anderson MBA students, alumni, faculty, administrators, corporate partners and the staff of the Parker Career Management Center has resulted in one of the strongest employment years for UCLA Anderson students in quite awhile.

The 2003-04 academic year saw meaningful increases in the number of companies recruiting on campus, the number of opportunities available for graduates, and the percentage of graduates and summer interns employed. The Parker CMC reports a 68% increase from the previous year in recruiting opportunities for students seeking full-time positions and summer internships in a broad range of business industries and functions.

"I believe these results come from listening to recruiters' interest and advice, our efforts to prepare students on how to manage their career search process, and, of course, the outstanding personal and professional attributes of a UCLA Anderson graduate," says Dean Bruce Willison.

Significant Statistics
In the MBA Class of 2004, 90.3% who were seeking employment had received job offers and 88.0% had accepted those offers within three months of graduation. This compares favorably with the corresponding figures of offers and acceptances by the same time in 2003.

Some 21.7% of students reported to the Parker CMC that they accepted offers which came through a campus recruiting program, while 24.5% said they secured their positions through some other UCLA Anderson contact, such as alumni, faculty, Day-on-the-Job, an academic internship, the Applied Management Research Program or the Price Center.

The perennial top MBA hiring industries of investment banking and management consulting once again employed the most UCLA Anderson students. While consulting decreased from last year's 14.4% to 12.0%, the percentage of 2004 MBAs employed in investment banking increased from 14.4% to 16.1%.

Exemplifying the broad range of industries typically employing UCLA Anderson MBAs, the entertainment, real estate, pharmaceutical/ biotech/medical devices, venture capital/private equity/LBO, food/beverage/tobacco and household/personal products industries all hired a significant number of MBA graduates from the Class of 2004. About 10% of UCLA Anderson MBA students pursued their own entrepreneurial ventures, consistent with one of the school's many traditional strengths.

In terms of job function, finance-related positions continued to be the most sought after path for UCLA Anderson MBAs. Combining the numerous finance functions, 43.1% of the class took this route, with investment banking and corporate finance leading the way. Marketing-related functions were secured by about onefifth of the class, most in product and brand management. Consulting was still popular among Anderson students, with general management and real estate development/ finance also proving to be areas of great interest.

Mean base salaries increased slightly to $87,022 while the median base salary remained the same at $85,000 annually. Again, mean signing bonuses increased slightly to $15,621 while median signing bonuses remained at $15,000. In addition to a slightly greater number of signing bonuses, there was a significant increase in the number of students receiving other guaranteed compensation, which led to an increase in median total compensation to $100,000.

Looking to the Class of 2005, Eric Mokover ('80), associate dean, career initiatives at the Parker CMC, is eager to maintain the positive upward momentum. The 330 members of the Class of 2005 were selected from an applicant pool of 3,492. They entered UCLA Anderson with a mean GMAT score of 703 and a mean undergraduate GPA of 3.6. Top five undergraduate majors were engineering at 24%, business at 21%, economics at 19%, math/science at 15% and other social sciences at 11%.

The Class of 2005 comprises 33% women, 26% international students and 25% minority students (17% of which are Asian- American, while the remaining 8% include African-American, Latino and Native American students). The average number of years of post-baccalaureate work experience was 4.5, with the top five backgrounds by industry being finance at 22%, consulting at 15%, high tech at 24%, entertainment and media at 5% and public and non-profit at 5%.

"This enviable ‘input,' along with the extraordinary value added from our world class faculty, provides a winning combination that we think most organizations will find compelling as they search for future leaders," says Parker CMC's Mokover. "The team of professionals at the Parker CMC is eager to help organizations find perfect matches among UCLA Anderson MBAs and we remain committed to providing the very best service possible."

Anderson Assets welcomes input from alumni and the UCLA Anderson community for letters to the editor, articles, or ideas on themes.