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THUNDERBIRD. THE AMERICAN GRADUATE SCHOOL OF INTERNATIONAL MANAGEMENT • VOLUME 53. NUMBER 3. 2000 THUNDERBIRD, THE AMERICAN GRADUATE SCHOOL OF INTERNATIONAL MANAGEMENT • VOLUME 53, NUMBER 3, 2000 2 - OYER STOHl' The E-ing of Thilllderbird Technology now permeates nearly every aspect of life at Thunderbird. The School has developed 'killer aps' that place it squarely on the cutting edge of student and alumni information delivery and interactivity. It has also developed a wide range of ebusiness programs and incorporates technology into nearly every course and campus experience. Alumni who graduated more than two years ago wouldn't begin to recognize the place! ABOUT THE COVER: Prof BiU King has incorporated aformal entrepreneurship project into his English as a Second Language course. His students write a business plan, create a company Web page, and come out extremely esa'IJVY! -EATrRES 8 LEVERAGING BUSINESS INTELLIGENCE FOR GLOBAL GAIN Global companies are in the perfect position to capture and leverage critical data. 12 BUSINESS INTELLIGENCE: A GLOBAL MANAGEMENT TOOL Prof. Paul Kinsinger shares his secrets and explanations in this issue's Faculty Viewpoint. 14 GOOD GLOBAL STRATEGIES REQUIRE A CLEAR VISION OF TRUE NORTH Orit Gadiesh says that the world's best companies !mow exactly where they have to go. 16 WHAT MAKES A SUCCESSFUL GLOBAL STRATEGV? Why do some companies succeed while other seemingly similar companies fail? 19 STUDENTS DRESS TO IMPRESS AT INTERNSHIP FAIR Students were competing for 60 internships. Companies were competing for top talent. 22 T-BIRDS OF TODAV Meet these five Class of 2000 graduates and you'll understand exactly who they are and what Thunderbird has meant to them. 26 SILICON VALLEV FORUM ADDRESSES ' NET' ISSUES FROM ALL ANGLES Who can explain Silicon Valley and the New Economy better than its key players? 31 THUNDERBIRD LAUNCHES MAJOR AD CAMPAIGN Thunderbird begins taking its brand to the world with an aggressive new ad campaign. 34 FOUR ALUMNI SHARE PRIVATE BANKING WORLD INSIGHT Major private banking entities are taking fresh looks at Thunderbird. EPA H T ~I E ~ T S 20 EVES AROUND THE WORLD Born in India and raised in the UK and U.S., S3l\iyot Dunung's ('87) life has always bridged cultures. Today, her New York-based business does too. 24 LETTER FROM ELSEWHERE Jim Anderson '80 shares his insights in Silicon vaUey: Birthplace of the New Economy. 28 CAMPUS NEWS 32 NETWORK NEWS 35 UPDATES .. AGE ONE Expanded Executive Education Programs Provide Training Near Home and in Targeted Regions T-bird Expands Into Taiwan For 54 years, students from throughout the world have trekked to Thunderbird. Now Thunderbird is taking more and more of its top-rated programs throughout the world to busy executives-offering them the option of either studying close to home or in one of their regions of interest. With students from more than 80 countries on Thunderbird campuses in the U.S., Japan, and France, numerous MIM exchange and/or travel programs, and regular Executive Education offerings in more than nine countries, many already consider Thunderbird a highly global entity. However, School officials have announced an exciting Exec. Ed. expansion that includes new regional course offerings in Asia, Europe, and Latin America "More than 4,500 executives a year already take part in Thunderbird's current Executive Education programs, which are offered on four continents," said Thunderbird President Roy A Herberger, Jr. "With its new programs, Thunderbird will be training more than 10,000 global executives per year within four years." School officials announced their first regional expansion, into Taiwan, in late April: a ten-course Global Executive Development Series that covers topics such as ecommerce, global marketing, cross-border negotiations, international finance, and global economics and politics. All programs are six days long, drawn from Thunderbird's MIM curriculum, taught by professors from Thunderbird, and run in collaboration with The Acer Group -one of the world's top three PC, component, and peripheral companies. Managers who participate in those programs may apply their credits toward a full MIM degree at Thunderbird. The School has also teamed up with the American Chamber of Commerce in Taipei to provide a wide range of two-day executive education certificate programs to chamber members. The first such program, entitled, Globalizati on: Merging Strategy with Action, will be held in October. Thunderbird and Acer Group officials form a partnership that takes Executive Education "At Thunderbird, we have programs to Taiwan. The School plans to offer programs in the U.S., Asia, Europe and identified Taiwan as being at Latin America; and to serve 10,000 executives per year within four years. the crest of the current wave of globalization," said Bud Robyn, senior vice president, Executive Education at Thunderbird. "This environment requires strong, globally-minded leaders with new management skills. Acer and Thunderbird have a shared vision of the critical role education can play in helping companies and managers excel in the global market. " The School already offers several other programs in Asia: a full-time, year-round campus in Tokyo, Japan for MIM and Exec. Ed. students, as well as year-round executive training in Shanghai, China, and periodic executive training in Seoul, South Korea In Latin America, Thunderbird is aggressively pursuing partnerships that will help it bring a comprehensive executive education series to Brazil. The School has offered a distance-learning program, called MIMLA, to working professionals in Mexico and Peru for the last two years, and is working to expand that program into several other Latin American countries. European executives may obtain critical global management training at Thunderbird's year-round facility in Archamps, France, which is located just across the border from Geneva, Switzerland, as well as in Moscow. Thunderbird has been ranked No.1 for five straight years by U.S. News & World Report in the International Business education specialty. Its executive education programs have also been ranked consistently among the best in the world by Business Week and the Financial Times. • For additional information on Thunderbird's global Executive Education offerings, please contact Frank Lloyd at email@example.com or (602) 978-7923. f you're a little tired of hearing about e-this and dot-com-that, just remember this: "Those managers who aren't part of their companies' ebusiness efforts will sink through their organizations. " This realization by Thunderbird President Roy A. Herberger, Jr. is integral to the School's initiatives regarding entrepreneurship, venture capital, and ebusiness, which have literally transformed the institution in recent years. The transformation has been so dramatic, in fact, that alumni who graduated even two years ago wouldn't recognize Thunderbird today. "Management vision and technological competencies have simply never been as important for global managers as they are today," stressed Herberger. "That's why we want our students, and in fact, our entire staff, leveraging leading edge systems and software throughout their daily lives.' Laying the Groundwork The School began with its technological infrastructure. Everything is now online, from registration to research. Thunderbird has invested millions of dollars in infrastructure and applications- like My Thunderbird (MTB) , Alumni My Thunderbird (AMTB), and ProFit, the Career Management Center search system that automatically matches and rank orders students for open jobs-as well as enhancements to its external Web site, which will debut this Fall. These 'killer aps' (as they're dubbed by industry gurus) are so advanced that companies as large as Dell have offered to buy them. To date, nearly one-third of the School's 31,000 alumni from more than 50 class years have signed on to AMTB, which debuted in November 1999. Students, faculty, staff and Executive Education clients are also leveraging parallel systems, which allow them to II by Lindsey Michaels and Jessica McCann access School databases, news, class materials, and emails from anywhere. Those killer aps already give T-birds unprecedented access to each other and the things they need to know. But, by Spring 2001 the system will get better still when alumni, staff, faculty, and current students on all T-bird's campuses are tied in to one system. That means that Thunderbird alumni can not only search for each other; they can also search for faculty members with specific expertise, and students who might be perfect for many jobs. That feature will make it easier for alumni to 'hire' needed project-oriented student! faculty research teams. In the meantime, alumni are doing amazing amounts of business on AMTB because it allows them to post personal and professional profiles, link to corporate materials and Web pages, and participate in open discussions on everything from potential joint ven-tures to job opportunities. Alumni can see photos and read speeches from key onand off-campus events. They also can access local chapter pages and participate in online discussions led by alumni experts in many fields. In addition, Thunderbird has actively encouraged faculty and staff to leverage technology-and both groups are doing so. Seventy percent of Thunderbird's faculty members had established online course materials within 14 months of the My Thunderbird release. All departments have also put most of their key materials online. Plus, faculty and staff-as well as students- have created online personal profiles and links that enhance interactivity. At the same time, School officials are working aggressively to develop online courses and other language, function, industry and country-specific materials that alumni can access on demand. They have even announced a tech-related dotcom spin off that should help keep Thunderbird on the forefront of educational technology. And current students? The School, which already requires students to have personal laptops, has invested in four T-l lines, innumerable plug-in data ports throughout its classrooms, library, cafeteria, lounges and dorms, and has incorporated technology into nearly every aspect of the registration, classroom, small group, and research process. T-birds, for instance, obtain course handouts and classmate profiles online and have active course chat rooms where they can swap information and post small group project materials as well as their final Powerpoint presentations for classroom use. Even more exciting, they have nearly unlimited online access to some of the world's best-and most expensive- THUNDERBIRD 53/3 / 2000 www.t -bird.edu THUNDERBIRD 53/3/2000 www.t -bird.edu databases. That means they can sign on from home at 2 am.-or from the companies they are interning with-and find country and market-specific data that is so detailed and valuable that some alunmi are leveraging their student interns just to do research. Electrifying the Curriculum Given that T-birds are early-adapters and entrepreneurs by nature, no one needed to encourage them to jump on this ebusiness trend. They have signed up in droves for every ebusiness and/or technology class that Thunderbird offers. Those classes include electronic commerce for global markets, marketing high tech products and services, global telecommunications marketing, intellectual property, and foreign direct investment and technology transfer. At least one additional 'core' class, introduction to ebusiness, was also recently approved. And, while you might expect to find an extensive 'e' element in traditional courses like Thunderbird's competitive intelligence, global sourcing, marketing, competitive strategy, entrepreneurship, research a company or new idea, write a business plan, create a company Web page, and interact with global team members online. As a result, students leave his class with interesting global ebusiness insights, and highly marketable skill sets. Dr. Signe Nunez, a ChileaniSwed who was born in Brazil and raised in Mexico, uses Thunderbird's tele-video studio to two-way broadcast her cross-cultural communications lessons to students throughout Peru and Mexico who are enrolled in Thunderbird's Master of International Management-Latin America (MIMLA) program. Those students then use My Thunderbird to post comments and materials. Dr. Anant Sundaram, who is from India, uses that same facility to simultaneously teach his advanced managerial finance class to Thunderbird students in Glendale, the French-Geneva Center, and Tokyo. Students at all three locations can see, hear and talk to each other as well as share materials. Dr. Salvatore Federico '99 (EMIM), a French national, has even incorporated technology into his business language training. He developed a highly interactive French language CD-ROM that presents more than a dozen business situation and culture cases. Students can read each case in French, click on a word or phrase for the translation, click again for grammar information, then yet again to hear a native French speaker pronounce the highlighted part. Students can even practice pronunciations by recording themselves and generating a computerized voice comparison. In addition, the School has been sending students on the road for e-related opportunities. For example, 25 current students recently spent a week in Austin, Texas, a major ebusiness hotbed, visiting area high-tech companies such as Dell, Concero, Vignette, 3M, Broadjump and Garden.com. This trip was a joint effort in the T-bird community, and a huge success, thanks primarily to the hard work of current student Carrie Norton and Lance Mchmes '90. McInnes, who is also a TAA North America Board member, left a successful eight-year international Coca-Cola career last year to join Austin-based KnowltAlLcom, which develops Internet enabling software that helps customer service representatives and direct sales agents interact live with customers over the Web. "Carrie had originally approached me about doing an Austin-focused ebusiness conference at Thunderbird, but we eventually decided that it would be better to actually bring Thunderbirds to Austin," McInnes said. "T-birds just naturally have the perfect personality profile and backgrounds for ebusiness. They will be in a perfect position two to three years from now when all of these dot. corns truly go international and need help with things like currency exchange, office and decision modeling classes, you will also find technology used innovatively in other not-so-obvious programs. For instance, Professor Bill King has incorporated a formal entrepreneurship project into his English as a Second Language curriculum. Long a classroom pioneer, the tech-savvy King gave learning business English a whole new twist by teaching foreign students how to Technology advances at Thunderbird have been funded in part by two members of the Board of Trustees. John Berndt and his wife Jean gave 5500,000 to create the John & Jean Berndt Fund for Technological Innovation, which promotes new technology initiatives developed by faculty and administration. Trustee Sam Garvin and his wife Rita, through their company Continental Promotion Group, Inc., also contributed 5500,000 to fund ebusiness curriculum development, student assistantships and an executive-in-residence. openings and joint partnerships, and dealing with language and cultural issues." "It was fantastic," Norton added. "I think we exceeded all of the students' expectations in providing insight, contacts, and value. We definitely built some bridges here in Austin-which was our intent. We represented Thunderbird very well in terms of our diverse cultures, skill sets, and THUNDERBIRD 53/3/2000 4 www.t -bird .edu aptitudes. We also put Austin on the map in many students' minds.» The students, who were mostly from the U.S., Asia and Latin America, met with area alumni, corporate executives, and venture capitalists researching ways in which they can leverage their technological training, multicultural backgrounds, and language skills to benefit Austin's burgeoning hightech entities. The group even arranged for former Dell International president, Andrew Harris, to address an open-to-thepublic First Thesday crowd. His topic was "From Dell International to the '.com': The Internationalization of the New Economy." Harris is the current founder/CEO of Austin-based Handtech.com, which is pioneering a new marketing channel that would deliver Internet based applications and technology products and services to over 12,500 technology consultants. Meanwhile, a second student group was completing a similar, two-week Silicon Valley Interim. Sponsored by Dr. Michael Woolverton, a marketing professor at Thunderbird, the Interim included 26 students who visited venture capital and preIPO companies, as well as established veterans Apple and Hewlett Packard. Students also participated in Garage.com's two-day entrepreneurial boot camp and the Thunderbird Global Business Forum, entitled Making the Global Net Work, in May. "We had planned on doing this trip as a Winterim next January, but given everything that's going on in Silicon Valley, the consensus was that we couldn't wait that long," said Woolverton. "We wanted to see firsthand what was going on in ecommerce and what opportunities might be available for our very entrepreneurial and global student group." Woolverton credited current student Kristen Landry, who is president of Thtmderbird's Women in Business Club, as the major planning force behind his Interim. lifelong Learning Making the Global Net Work was one of six ebusiness related forums Thunderbird will host worldwide this year. Thunderbird Global Business Forums are half- or fullday seminars on timely topics that make leading-edge practitioners and Thunderbird faculty available to global managers worldwide. The May event featured top speakers from Cisco, Silicon Valley Bank, E*1'rade, OpenTV, GlobalSight and several other New Economy concerns, and covered such areas as technological transformation, globalization versus localization, funding, and other trends. "There was a lot of good irtformation presented here,» said Chris Johnson '86, a managing director with Bank of Nova Scotia, and TAA North American chairman. "So far I've heard very positive comments." Johnson was especially impressed by the fact that so many current Thunderbird students-Interim participants, students on nearby internships, and others who came just for the Forum-attended the sessions. "You can't understand Silicon Valley from outside it," he said. "You have to come here, experience it, and mine the intellect and energy." The Forum attracted almost 300 people, including about 30 percent who were not T-birds but who were simply drawn by the topic, speakers and programs. It seems that even though many people don't yet understand Thunderbird's growing ebusiness prowess, they do understand the Enhanced Online Community Offers Alumni More The old adage, 'less is more: simply doesn't hold true when it comes to Alumni My Thunderbird (AMTB), Thunderbird's alumni-exclusive online community. Since AMTB was launched in November 1999, nearly 9,000 alumni in 97 countries have signed on to take advantage of valuable personal and professional development opportunities. AMTB offers many features, including hot job postings, information about upcoming events, access to free online international-business research, lifetime email and discussion groups (on topics such as venture capital, ecommerce and the Thunderbird brand strategy). And, this summer, Thunderbird launched II!!!!!!I~===~ AMTB 2.0, an enhanced site that offers alumni even ,..=.. -_ _ more: • advanced searches, • news and information, • personalization options, • user-friendly navigation. AMTB 2.0 provides greater ease of navigation, as well as the ability for alumni to add their favorite =EI-!-- .=-._-- .. ----_ .. _-_ _.-.. ----links, files and photos to their personal pages within the site. It also provides free Web space for the Thunderbird Alumni Alumni My Thunderbird's Association's 150 chapters to build and maintain their own pages (AMTB) new design and discussion groups. The Chapter Pages feature of AMTB makes it easier to find allows Chapters to post real-time news and information on their what you're looking sites. This further enhances the dynamic, interactive nature of for-from local chapter AMTB and strengthens the connection among alumni worldwide. contacts and information Visually, the new site also embraces the 'look and feel' of Thunderbird's brand strategy and ad campaign, featuring photos of alumni from around the world. A survey of AMTB account holders was conducted in the Spring, on upcoming events, to fellow alumni and lifelong learning to assess the value of the site and gather feedback for possible opportunities. enhancements. Nearly 18 percent of the more than 6,000 alumni surveyed responded. A full survey summary is posted on AMTB, but here is a sample: • "The Web site is providing a terrific service. I was able to locate several lost friends." • "I really value the service of the lifetime email account. Because we T-birds are constantly moving around and changing jobs, it is difficult to maintain current info, let alone email addresses, of all of our friends and classmates." • "The creation of the My T-bird web site has re-sparked my involvement in local chapter events and networking." You can sign up for your free AMTB account by logging on to http://alumni.my.t-bird.edu. by Jessica McCann THUNDERBIRD 53/3/2000 www.t·bird .edu value of the School's unique global perspective in the New Economy. As a result, demand for Thunderbird-related ebusiness training is on the rise-especially among working executives. Thunderbird's Executive Education group has responded by developing a series of modular ebusiness programs. Its recently held, weeklong, Global Management in a Digital World was a complete sell out. Two-thirds of the program seats were filled before the curriculum was even finalized. While ebusiness issues are incorporated throughout most Exec. Ed. programs, the Valuing a dot.com section of a recent mergers & acquisitions program drew rave reviews, as did Dr. Bill Youngdahl's global sourcing program, and a Brazilian telecommunications industry workshop. Exec Ed. also offers a formal Global Telecommunications Management Program, which has been taught to executives from more than 50 countries. Other stand-alone ebusiness workshops are in development. Forum near you. Be an online expert or guest speaker. Learn more about Thunderbird's awesome online stuhelp you achieve almost unlimited personal and professional success. And by so doing, it-and you-will all-but-ensure that the School retains its coveted No. 1 ranking! • Does it sound like the Thunderbird you email addresses: knew when you were here? Hardly! Technology and ebusiness now figure so prominently in nearly every aspect of life at Thunderbird that you might wonder if you've stumbled into the Twilight Zone. But you would so eI\ioy that zone! So jump on board. Sign on to AMTB and use it. Attend a Thunderbird Global Business dent research capabilities. Consider leveraging our incredibly esavvy student base for internships, consulting work, and other jobs because, right now, they're a very underused resource. Herberger: firstname.lastname@example.com McVicker: email@example.com Federico: email@example.com Mcinnes: email@example.com Johnson: firstname.lastname@example.com The bottom line is that Thunderbird's Anderson: email@example.com new technology, combined with its worldfamous studenU faculty/alumni base, can Joyce: email@example.com Lehrer: email@example.com STUDENT-LED INITIATIVES HELP ELECTRIFY THUNDERBIRD When it comes to 'e' stuff, T-bird students are making their own opportunities. They developed their own HTML programming and Web page creation program in partnership with the School's various technology staff groups and began teaching each other about the Web. They also conceptualized and held two outstanding entrepreneurship, venture capital and ebusiness conferences (eVe) that brought dozens of leading New Economy practitioners to Thunderbird. Those conferences, which were held in October '99 and February '00, helped trigger an all-out ebusiness explosion at Thunderbird. Both daylong, student-led events drew an overflow audience of students, faculty, staff, alumni, and non-Thunderbirds that filled both the school's auditorium and an adjacent conference room. There, they heard speakers like Alan Hald, co-founder of MiaoAge, Mark Hogan, group vice president of General Motors, and Jim Anlt.1ID1:-,o. fnlNlgIng GlflClOr.-tlrtG ~esldeot of SVB 5ecuritie$, _:,,-4.rsul.-.,.>f.$l!itcH.1I,V ... ,ante, dlscusS "The eVe conference was one of the best conferences I have ever attended on the subject of ecommerce," said Barney Lehrer '89, a New York-based ecommerce practitioner and TAA North America Council member. "The speakers-l'm proud to say many of them were fellow T-bird alums-were first rate, the organization very professional, and the networking opportunities were fantastic. I look forward to the next one." Given the wide range of possible topics, Leslie and his team elected to group speakers by category. They also arranged a good mix of keynote and panel discussions, as well as pre- and post event mixers and a speaker lunch. Thunderbird President Roy Herberger kicked off the February conference. Then, speaker Jim Anderson of Silicon Valley Bank immediately established the Importance of the Internet by asking how many in the audiencAt had already been online that 1JIOming. The answer was:.I~. tNn SO perqnt, even though It ... liartt)t 8 l.m. ~in~"" ·.ntIi_1ciI\g is • • Of 1M tr~ltion at ==~~==~ ,~~~.~~ .... ~~~~ .... ---~ THUNDERBIRD 53/312000 www.t-bird.edu Le Intellige '81' is one of the most overlooked and critical decision-making tools in the world today. , 'M any global conglomerates could have more competitive intelligence capacity than most small- to midsized nations do. All they'd have to do is capture the information their people throughout the world already know then funnel it back to one location for analysis," said Jeffrey Flint '99, a team leader with Proactive Enterprise, Inc., a leading U.S.-based business intelligence company. "For instance, a company might want to know how long it will have new product exclusivity. Or, it might want to search for any skeletons in the closet of a company it's acquiring. It might even want assurance that the expatriate it is sending abroad has the right skill- and mind-set to succeed in that new environment," Flint said. "Whatever it is they want to know, our clients are always wide-eyed when we show them what's legally available." So, what exactly is business intelligence? And, better still, how can today's global companies leverage it to derive some major gains? "Competitive intelligence, or business intelligence (BI), as it is also called, is a decision-making tool that is focused almost entirely on the external environment," said Professor Paul Kinsinger, a 20- year Central Intelligence Agency employee whose Thunderbird BI class has 'sold out' almost every trimester for seven years. "BI isn't espionage. And it isn't marketing research. It's a comprehensive radar sys-by Lindsey Michaels tem that helps people identify and take advantage of market shifts and opportunities, while missing potential mine fields," he said. As such, BI should be applied to virtually every major executive decision and a company's competitive strategy should drive its BI activities. "In the best scenario, BI helps companies look at the competitive environment and effectively make decisions that create- or protect-value for their stakeholders," said Michelle (Robertson) Settecase '95, a global manager for tactical competitive intelligence at Ernst & Young. "We're talking about, literally, everything from establishing personality profiles on key leaders that help you predict what they will do, to researching plant capabilities and current activities, to understanding supplier, buyer, and joint venture relationships, to ultimately, establishing classic 'what if scenarios or 'war games' that help you predict and respond to current or future shifts strategically." "Unlike market research, which is more quantitative, business intelligence is much more qualitative in its nature," said Kinsinger. It involves two very distinct skill sets. One is information collection-which requires innate curiosity, good listening skills, and the ability to extract data. The second is critical thinking-which requires strong analysis and logic skills, as well as a dash of cynicism. Kinsinger believes that while the first skill can be taught, the second largely can't. That people are either wired for critical thinking or they're not "In that respect, BI, as a tool, is both art and science," he said, "where the art is the challenge of making the whole puzzle clear when you only have 20 to 30 percent of its pieces." Which is where cultural expertise and in-country contacts come in to play. "The U.S. is a very information-rich soci-ss al Gain ety," said Settecase. "Ninety to 95 percent of the raw data one needs for good BI are public knowledge-if you know where and how to look." Online, for instance, corporate Web sites serve up amazing amounts of data, as do local newspapers, Who:S Who listings, trade journals, and the Security and Exchange Commission filings that publicly traded companies must file. Many counties also put land, marriage, and divorce records online. "Then there are things like permit offices, where you can look at specific building schematics to judge capacity. How many workers can it hold? Whatand how many-chemicals are stored onsite? Who is its hazardous waste contractor and how much does he haul out each week? All such records are valuable. " "I also check with each Secretary of State's office," Flint explained, "because companies have to record their officers, patents, trademarks, and private label names with them. Then, there are the Internet host companies, because you can sometimes find domain names registered for new products that are still in development. And industry-specific 'chat rooms' where current and former employees, as well as suppliers and buyers, often provide extremely valuable first-person insight." Accessing The Right People and Facts Talk to anyone in the BI field and you quickly begin to hear a theme. That is: employing native speakers and those with extensive cultural expertise and contacts is essential for success. So too, is developing a good, centralized data collection system and strategy. It seems that first-person information is one of the lifebloods of good BI, especially when seeking data outside of the U.S. where public records are scarcer and real knowledge rests with the local elite. Business Intelligence helps companies 'see' what the future holds. Michelle Settecase '95 calls it 'a great for infonnatlon junkies (left) Gerald Heydenreich '97 of Germany spends a full quarter of his time doing BI for his company. (right) Jeffrey Flint '99 poses with his daughter at a Competitive Intelligence conference. His prior work in Russia gave him an edge in his current BI job. THUNDERBIRD 53/3/2000 Obtaining good intelligence in other cultures is often difficult, if not impossible, for non-natives who don't have an 'in' through business or family ties. Which is precisely why multinationals, which have operations-and country nativesthroughout the globe, could become incredible BI powerhouses if they would harness their resources effectively. "To be frank, we tend to automatically utilize European affiliates of U.S.-based companies as a resource," said Flint. "Since 1 specialize in the pharmaceutical industry and drugs often get tested in Europe first, Europe has always been a good corporate counter intelligence source." By talking to local sources, Flint said, he can usually find out how clinical trials are going, what's on the drug's label, and what the likely release timeline will be. "Often 1 find that if 1 can come to an industry expert or clinician with half of the story, they feel less threatened. They're more willing to confinn or deny some of my assumptions and share things like who is for the drug and who's against it and why." Armed with that information, Flint can often guess the rest of the 'puzzle.' "Stop and think about it. As an American, wouldn't you be more comfortable giving out information if the stranger calling you had an American accent and seemed to know what he was talking about?" asked Gerald Heydenreich '97, a German national who did BI for Horchst AG, now Aventz, before starting his own B2B online auction firm. "I can tell you from first hand experience that having a German accent and knowing the facts works much better in Germany." According to Heydenreich, cultural nuances also play significant roles in BI work. "In general, I think that Europeans are much more closed, more risk-adverse than Americans," he said. "They need more time to warm up-to feel comfortable with the caller and the call. But once they do, they tend to tell you everything you want to know. Americans, on the other hand, have always been much more open initially, but they tend to close up when you get to the very important things." "Culture can actually make a big difference on three levels," explained Settecase. "It affects how you get the information, how you analyze it, and how you deliver your report to your clients. " According to Settecase, some countries have legal restrictions about what you can ask and whom. "In Germany, for instance, you don't ask salary or financial data and in www.t·bird.edu HOW TO BEGIN by Paul Kinsinger There is no single, 'best practices' solution for organizing a BI effort in your company. Much depends on your organizational structure, as is indicated in the models below. CENTRALIZED designed to support 'C'-level strategic decision making; usually found in single business companies where decisions are corporate-driven. DECENTRALIZED designed to support SBU-level strategy and even tactical intelligence needs; found in companies with disparate businesses. HUB-AND-SPOKE designed to support strategic effort at corporate level and to coordinate with separate SBU-strategicltactical effort; found in companies with adjacent businesses. Paul Kinsinger brings 20 years of CIA experience to his Thunderbird Business THE CEo-BI "CONSIGLIARE" a senior BI executive who reports directly and sometimes solely to the CEO; rare and always a matter of personal ties. THE BI ORCHESTRATOR used by smalVmedium-sized companies where one person coordinates internal intelligence needs with outsource providers. Intelligence coursewhich many students THE 'LIVING, BREATHING INTELLIGENCE CULTURE' where BI becomes second nature in the company; term a 'career gold employees recognize importance of BI and take part in collecting, analyzing, and disseminating critical external intelligence. mine.' Although organization type should drive how to set up a BI effort, in the end, its success will depend far more on your company's decision making culture. If your executives have a systematic approach to decision making and are open to others' expertise, then BI should help you. If they are last minute, 'seat of the pants' decision makers or already know everything, then don't waste your money. Russia," where Settecase spent five years, "you can't legally ask people about their own companies." She added that in Russia, she is more effective when she goes to buyers and suppliers using an indirect, opportunity- oriented approach. "I'd say something like, 'I understand you are implementing an ecommerce strategy at XYZ company. I'd like to talk to you about how you might also help implement something like that for us.' In Turkey, though, my best option would be finding gets or when assessing potential joint venture partners or supplier solvency. "In countries like Brazil, where 20 to 30 families control most of the nation's wealth, you would be wise to penetrate at that level, or else, develop deep relationships with company CFOs or with their banks," she said. "In France and Japan, though, anything goes when doing BI. But in France, especially, which has a very active government someone who has a close, personal relationship with people in government, preferably, someone with links to the Electronic Commerce Commission. And in Singapore, where a narrow group controls most of the government and enterprises, you have to hire someone to get you 'in' if you're a foreigner." 81 isn't espionage. intelligence community, you should assume that your French competitor is probably getting information directly from French Intelligence for things like major bids and labor disputes because the French believe that providing such data is in their national interest. " And it isn't marketing research. It's a comprehensive radar system that helps people identify ... market shifts and opportunities. Interpreting and presenting data also takes on Good business intelli-gence is, perhaps, most paramount when doing due diligence, especially in cultures where there are no Security Exchange Commission or Financial Standards Board controls. Many a company has found that accepting financial data at face value from such countries can be incredibly costly when attempting to value acquisition tar-culturally significant overtones. Good business intelligence analysts, can, for example, put together comprehensive personality profiles of new corporate or business unit leaders that help them predict future business moves and potential corporate culture shifts. For instance, while a hard-charging, heavily hierarchical management style might work well in some locales, it would fail miserably in others. A good analyst would account for that. He would also adjust his client presentation style. "In the U.S., most companies want us to present a fully-documented written plan with spreadsheets and full graphics," Settecase said. "In other cultures, they only want things verbally. " "Most people wouldn't drive down the road with their eyes closed, yet a great many companies think nothing about trying to navigate without BI," said Kinsinger. "That's like trying to win a war without reconnaissance. The name of the game," he added, "is obtaining primary source data. Then predicting probabilities and weighting them. The next step is, then, identifying 'sign posts' that help you determine relative positions as the landscapes change. " A Typical BI Scenario U.S.-based ABC company is in the early stages of a new product launch that will take at least nine months to prepare effectively. Given the amount of money that's at stake, the company asks its BI group to scan the external environment to help it make a 'go' or 'no go' call. The BI group conducts the competitive assessment and finds that German-based XYZ company is developing the same product at its plant in Singapore. It also determines that the mar- THUNDERBIRD 53/3/2000 10 www.t -bird .edu ketplace isn't big enough for both products and that the company that's first to market stands to make millions of dollars while the later company may lose millions. How do the BI group and company proceed? By leveraging its sales representatives, suppliers, and other in-country contacts, the BI group is able to gain proactive intelligence regarding the competing team's size, capability, collective personality, and resources. From its initial 'snapshot assessment,' the BI group offers two assessments: there is a 15 percent chance that XYZ is three months ahead of them and a 40 percent chance that it is three months behind them. Based on the BI team's assessment, ABC's executives authorize additional resources to help expedite the launch. They also authorize a comprehensive BI workup. The team then learns that the project leader has his team's unconditional support and that he has an unblemished history of new product success. ABC's BI team terms that fact a big 'red flag' that changes the odds in the earlier assessment. The BI team explains how 'signposts' will help it complete its job. For instance, it knows that both companies have to file for and clear the final regulatory hurdle four months before shipping. That's one very clear signpost. The team also plans on working next month's industry trade show in Paris. Members know that a key XYZ official is scheduled to speak, and that at past trade shows, such speakers have been willing to discuss projects that were within five or six months of release. The BI team also knows that several of XYZ's logical 'next step' vendors will be there. Team members also begin alerting ABC's multi-national sales and production teams. The BI group explains exactly what it needs to know and asks its in-country nationals to leverage their personal networks. Have the proper permits been obtained? Have online or local supplier and transportation contracts been signed? Or have such talks at least begun? Has XYZ started increasing its Singapore staffing or production capabilities? The team evens wants to know if the XYZ project leader has cancelled plans to take his upcoming annual two-week vacation in Bali. Based upon BI's next comprehensive report, which management has been promised within four weeks, ABC will make its next critical 'go' or 'no go' call. "We're talking almost unbelievable potential gains or saves," said Flint, who said his BI team once learned about a major competitor's Super Bowl-planned new product launch in time to pre-empt its effectiveness by having his client launch an advance campaign. INFORMATION CENTRAL "While it's often difficult to assign a value to Bl's role in preventing bad choices, it's relatively easy to justify a BI team's return on investment when it's working with the sales team," said Settecase. "I can tell you confidently that here at Ernst & Young we closed in·access of $50 million in business this year that can be attributed directly to our BI activities." "All I can tell you," said Heydenreich, "is that at Portum, my current online auction business, I spend at least a quarter of my time directly on competitive intelligence. If I didn't, I would be out of business." Given that the speed of global change today can make Mach 1 look like a Sunday stroll in Amishville, even medium- to largesized multi-nationals may not be able to operate much longer without excellent BI. Doing so may not put their immediate survival at risk, but it will definitely place their margins, market share, and market cap squarely on the world's 'Most Endangered' list. • email addresses: Settecase: email@example.com Flint: firstname.lastname@example.com Heydenreich: Gerald.Heydenreich@ portum.com Kinsinger: email@example.com or (602) 978-7611 Thunderbird doesn't just have one of the world's most comprehensive online global research libraries. It also boasts a 50-50 U.S. to non-U.S. student and faculty ratio, with some 80 countries represented at any time. That combination bodes well for companies seeking world class business intelligence on a shoestring budget or timeline. Alunmi and non-alunmi can leverage those incredible resources in several ways . • Thunderbird's Business Information Service (BIS) provides experienced business research specialists who can quickly locate needed data and deliver it directly to your desktop or door. Fees are extremely modest-$US60 per hour for alunmi and $75 per hour for others-with a typical search taking between two and ten hours. To learn more, please visit the BIS Web site at http://www.t-bird.edulbis or contact Jennie Oleksak '88, Thunderbird's business information systems librarian, at firstname.lastname@example.com or (602) 978-7236. • Contad Thunderbird's Corporate Consulting Program to 'hire' an experienced Jennie Oleksak 'SS student/faculty team to do your comprehensive, confidential business intelligence project. The cost generally varies according to breadth and depth of project, but is normally in the US$lO,OOO to $15,000 range. Client companies help select project members and receive a formal presentation at project's end. Please contact David Martin at email@example.com or (602) 978-7814. • Hire a Thunderbird Intern. Thunderbird offers three-to-nine-month internships at nearly every time of year. Interns have access to the School's entire database and bring native expertise and contacts. Thunderbird has students representing over 80 countries at any time. Many also have extensive second and third country expertise. Thunderbird interns are typically paid about $4,000 per month by U.S. corporations. You can learn more by contacting David Martin (see above). THUNDERBIRD 5313 I 2000 11 www.t -bird .edu so, what is this thing called business intelligence? Is it a business IQ test? Is it about 'cloak and dagger' games to acquire your competitors' secrets? Is it that artificial intelligence that someday will come to your companies? To some, business intelligence is any or all of the above, and that lends to the considerable confusion about this emerging professional field. But business inteUi-gence, or BI as I will refer to it, is none of these. It is quite simply another management tool that helps busy decision makers gain insight and fore!mowledge about "the external operating environment" -that dynamic arena over which companies have little or no control and influence-so they can make the best informed decisions possible. In this era of globalization, external issues-new markets, partners, legislation, or competitors-have become increasingly important. So, too, has the ability to understand, respond to, stay ahead of, or anticipate and pre-empt them. This is the realm of business intelligence, the on-board corporate 'radar' unit that is constantly scanning business horizons for opportunities and dangers. Have you ever faced these kinds of questions: "If we move to acquire company X, will competitors Y and Z do so, too?"; "the Journal is reporting that our key competitor is seriously considering exiting this market. Is this true?" If so, then you have needed business intelligence. Of course, many executives monitor external events through their own personal information networks, many of them firstrate. But two things ultimately work against this today. First, as we all !mow, the information world has exploded, overwhelming the ability of even the most voracious news junkies to stay afloat. Second, personal intelligence systems are not transferable- a liability when decisions are being pushed down to lower levels and executives are constantly moving on. In response, corporations of all sizes and structures have turned to business intelligence to stay better informed on a more systematic basis. Executives from several well-!mown companies have been quite candid about the wrong decisions BI helped them avoid, the dollars it saved, and the opportunities it spotlighted. And, companies not utilizing BI or its partner, corporate security, have found themselves on the losing end of competitive bids, preempted in new launches, or outmaneuvered in a key acquisition opportunity. Understanding Each 'Business Intelligence Environment' International business schools send graduates into the corporate world with several checklists and templates for grappling with today's challenges. Entering a new market? You must !mow about operating issues such as the local labor situation and political risks; financial issues such as rules for the repatriation of capital and local accounting procedures; and communications issues such as negotiating in another business culture. I believe today's global manager must also !mow about what I call 'the business intelligence environment' (BIE, and I have created a BI 'checklist' that they can take with them. • Accessing the Local Environment Competitive information-the raw material that feeds the business intelligence process-is available in every busi- THUNDERBIRD 53/3/2000 12 www.t -bird .edu ness culture, since no company can operate without disseminating it But is such information generally available, timely, and reliable? Can it be acquired through secondary sources or mostly through primary sources? If the latter, how do you access the key people who can provide you with good competitive information? In the US, competitive information is widely available, easily accessible, very timely, and mostly reliable. Why? The US is an information-saturated, technology-driven, and 'talky' business culture, where the provision or exchange of competitive information is rarely subjected to any cost/benefit analysis. Moreover, US companies are generally not overly concerned with information security and will often r isk leaking competitive information rather than commit resources to protect it. I call the US a 'high offense, low defense' business intelligence culture-like "runand- gun" basketball, you can "score" a lot of competitive intelligence without running into too much defense. Many other countries are on the other end of the scale, however. Although the kudzu-like spread of information technology is reaching into every business culture, many countries-especially developing ones with scant experience with political openness-still offer few if any reliable, timely secondary sources of business information. Recently, in a remarkable New York Times item reporting Chinese economic statistics, the author stopped in the middle to remind readers that, of course, China's official statistics were notoriously misleading. Then, he proceeded on to report the rest of the numbers. A major South American country required businesses to publish their financial numbers; the catch was that they could be printed in small, out-of-the-way newspapers with limited circulation. Many students from still other burgeoning economies have told me that almost no business information published in the local media can be believed. Part of this speaks to the scarcity of information technologies, but a bigger part is probably due to the personal, largely closed way that business has traditionally been done. And this, in tum, underscores the importance of having a network of key people with knowledge of business developments if you hope to conduct effective BI in most countries. As a result, building a BI team depends on hiring the right networkers- usually locals with family, political, or business connections or longstanding industry reputations who can work the phone, the restaurants, the clubs, and the parties and decipher who's reliable. • Understanding How Aggressively Local Competitors Engage In BI. In Asia, for example, Japanese, Korean, and Taiwanese companies have long had a reputation for aggressive competitive intelligence practices and good corporate security-especially against foreign competitors. All three countries are what I would call 'high offense, high defense' business intelligence environments. In Europe, some companies in countries that have long been highly trade-dependent, like Sweden and the Netherlands, also have such reputations. When competing in such business cultures or against such companies, an executive must plan to be subjected to an aggressive competitive intelligence effort. The antidote? Strengthening information security measures. • Knowing The Competitor's Defense Your intelligence collection efforts may have to be bolstered considerably to work a 'high defense' business intelligence environment On the other hand, BI is a cost center and if local competitors are asleep at the competitive information switch, then perhaps a more modest BI effort will suffice. For example, many former students from developing economies in Latin America and Asia have characterized their countries as 'low defense' BI environments, both because of the predominance of cozy, family-run businesses and the fact that truly competitive market conditions have only recently begun to emerge. Others from formerly state-run economies such as Eastern Europe echo this, claiming that business people in their countries sometimes do not yet fully comprehend the value of their company's operating information and can be loose-lipped about it • Knowing How Much 'Help' Competitors Get From Their Governments This can run the gamut from illegal and/or unethical means to acquire key competitive information from you or your premises through wiretaps or theft to the use of government resources to help local companies play better defense. This category is not much of an issue in many countries, but when it is, it can be the 800- pound gorilla Imagine being arrested after being told that your industry roundtable luncheons violate some obscure 1938 law protecting local business property. How did this happen? The head of your local competitor is the cousin of the intelligence chief and was starting to chafe at how well you were plugged in. • Knowing The Legal Restrictions Regarding Collecting Business Information There are many creative ways to acquire potentially advantageous business information, to be sure, but the major trading countries also draw the line at certain measures such as wiretapping and outright theft of trade secrets. While good, heads-up business intelligence relies on neither, some practitioners are lured (or pushed) over the line in pursuit of the 'easy answer.' In heading into a new market, the real issue for companies is in understanding both the laws on the books and the peculiarities of enforcement. Many countries consider tapping competitors' communications illegal, but is it enforced? If so, is the penalty prohibitive, or just an annoyance? In Southeast Asia, for example, eavesdropping is illegal but is still widely used. And, if laws are only selectively enforced, who is the target? Foreign companies? Starcrossed firms that have the misfortune to be competing with one headed by the cousin of the interior minister? • Knowing Local Ethics Regarding Collecting Business Information Each company has its own standards for business ethics and how they should be applied to acquiring competitive information. I make no judgments here, since even in the era of globalization, ethical standards differ from one business culture to another. The challenge for companies is to know that BI practices they are comfortable with in one business environment may not be acceptable in another, or vice versa As a result, some adjustments may need to be made to avoid sliding down an ethical chute into a legal hole in the pursuit of competitive information or to prevent information loss from unacceptable tactics others are using. The Bottom Line? Armed with this checklist, an executive taking a company into a new market can make business intelligence a key strategy tool for navigating the challenging waters ahead while simultaneously helping to protect the company's intellectual property against such efforts by others. After all, an executive who failed to protect shareholder value through poor operational decisions would be guilty of negligence. Shouldn't the failure to understand and prepare for the business intelligence environment be considered grounds for corporate negligence as well? • Kinsinger may be reached at firstname.lastname@example.com or (602) 978-7611 THUNDERB IRD 53/3/2000 13 www.t -bird .edu O rit Gadiesh immigrated to the U.S. and attended Harvard with almost no understanding of American culture, and with a non-native's English language skills. Since she neither understood the American movies her college friends laughed at nor the slang they used, she felt incredibly foreign. But nothing matched the frustration Gadiesh, a summa cum laude, faced when given her first graduate school case. She spent five hours simply translating and reading that seven-page handout. Significantly longer comprehending it. You see, analyzing a television campaign for cereal is difficult when people in your country don't eat cereal or use television to advertise. "I'd never heard of cereal. I'd never seen cereal. I'd never eaten it. 1 didn't lrnow it was a breakfast food," she said. "I didn't have a clue how to approach this and I almost gave up. " But Gadiesh didn't quit. In fact, she earned her Harvard MBA with highest honors, became the first foreign national to win Harvard's prestigious Baker's Scholar marketing award, and was recently named one of America's 50 most powerful businesswomen by Fortune magazine. Gadiesh is chairman of the board of Bain & Company, one of the world's leading global strategy consulting firms. She is also a recognized strategy expert who shared her experiences and advice during Global Week activities at Thunderbird. Gadiesh credits much of her success to her first job. She was a 17-year-old assigned to the Israeli war room, and then Israeli deputy chief of staff-now president- Ezer Weizman, during the Six-Day War. "I watched how people behave when they are in a position like that. How they interact with each other. How they react to what was coming in from the field . Looking back, I learned how to respect people in positions of power without being intimidated by them. And that's something- an important something-that I've taken with me for all of my life, I think." Today, Gadiesh uses that skill daily when dealing with CEOs from Fortune 500 companies. That's because Bain's culture requires its people to obtain quantifiable bottom line results for its clients-not simply write reports-which means that Gadiesh must sometimes 'engage' with clients who don't think that recommendations could---or should-be used. "Bain's expertise is in solving complex problems. But, if your idea is 'so brilliant' that it is not implementable, or if you haven't worked with the client to implement it, then it doesn't count," she said. "I call it the 80-100 rule, which is, obviously, a take off on the 20-80 rule. It means that if 100 percent of your idea can't be implemented, then go to the 80 percent of the idea that can be implemented." Still, sometimes, she admitted, getting even that 80 percent implemented is hard, hard work. To illustrate, Gadiesh told the story of one of her favorite consulting projects. She had been hired by a steel company that really needed to improve its profit picture. Gadiesh's research showed that the firm's Japanese competitors were using continuous casting methods while her client was doing smaller, more costly, alloy-specific pours. She did exhaustive research, then spent an entire day with the company's metallurgist, reviewing each compound. By day's end, he not only thought she was a metallurgist, he also agreed to help her convince the sales force, customers, mid-level, and senior managers that the company could continuously cast by reducing its number of formulas from 300 to 36. "To be a successful consultant, you have to listen to people very, very carefully, because a) you need to understand where they come from if you are going to be able to work with them to make change happen, and b) when you have different points of view, they could be right, even though you think you are. "You must also be able to work with many different levels of an organization, not just at the top," she said. "Because sometimes, as I'm sure you know, it doesn't matter what a CEO says he wants. People say 'yes sir' and figure out a hundred thousand different ways to make sure it absolutely doesn't happen." Which brings us back to Bain's core val- THUNDERBIRD 53/3/2000 14 www.t -bird .edu ues. and the concept of True North, which was the main topic of Gadiesh's student address at Thunderbird. "What intrigued me about Bain was its different approach to what the 'product' of a consulting company actually is," Gadiesh explained. "Bill Bain, it's founder, believed that the product of the consultant should be the bottom line results for the client and not reports. That you, the consultant, have to take responsibility for maximizing the possibility that it actually gets implemented. That means that from day one, you walk in and talk about what you need to do and what you need to do to get it implemented," she said. "You don't just do the report first and worry about implementation later." Gadiesh called that philosophy Bain's True North, then went on to explain the term. Most sailors, she said, navigate by using a compass that tells them magnetic north. But magnetic north is not a constant. It changes depending upon certain factors and that sailor's position in the world. True north, however, can only be calculated by using a gyrocompass, which works on its own internal system. "With all the changes that the world is going through, with all the turbulence, people always talk about what has to change," she said. "They say, change your competencies, change your strategies, and ask what you have to do to adapt. No one talks about what you should not change. To me, True North is the one thing that needs to remain constant in an organization. " To Gadiesh, True North is the very core of who and what a company really is. She likened it to a person's character, which is fornled early on as a result of interactions with one's parents and others. That core character rarely changes widely over time. A company's character, she continued, is oftentimes instilled by its founders and leaders. It defines that company. "I think it is extremely important that tions or move throughout the organization and countries." A True North also provides the basis to experiment from and come back to. "You can be profitable and successful without it," she said. "I don't think you can be a great company that people feel proud to be associated with, without True North. " Gadiesh credits Bain's True North with (~s a consultant, you can tell people and companies what they should learn. What they need to know in terms oj knowledge and capabilities .... When they lack core values and principles it usually becomes clear that it will be more difficult to affect meaningful change. " companies and their employees know what you anchor to," Gadiesh explained, "that they know what is important. It's what creates trust among all the members of the organization, especially when you go through difficult times." She said that she and her consultants can help companies problem-solve and strategize, but that ultinlately it is the companies that have a True North that really thrive. "Think of True North as a form of cohesiveness," she said. "As a CEO or division manager in one of today's fast-paced global companies, you don't always know what is going on throughout the company and world, but if you have a True North, you do know how people will handle certain things. You know that there are some things that are completely understood, and that makes it easy to make assump-helping it weather a major crisis ten years ago and says that even today, people in her company ultimately say, 'That's a True North problem' when dealing with critical decisions, such as when to drop powerful, profitable clients that are not really interested in acting upon Bain's consultants' strategies. "Sometimes it means that we don't take an assignment. We have even resigned assignments when it became clear that management was interested in a report not the execution and results," she said. Gadiesh said that her company must follow its own True North "or else the very bright people who work here are going to leave." At Bain, she continued, "all of our assets are people. We have our people, our customers and our reputation. That is it." Due to increasing globalization and competitive issues, Bain will hire 200 MBAs and MIMs this year, Gadiesh said. The company now has 27 offices worldwide. "In the last year, I've spent 100 days out of the country," she said. "I don't like the travel, but I love what I do when I get there. "It's something that I find absolutely enriching - which is why I am so curious and interested about this Thunderbird program. Globalization is something that most Americans don't think enough about or take the time to understand. But it's going to become more and more importantwhich is why I think curriculum like this School's is going to become so important and why other schools are starting to add curriculum like what's found here," she said. "All companies, American and others, will be looking to add people with good international understandings and backgrounds." • Gadiesh may be reached at: firstname.lastname@example.com THUNDERBIRD 53/3/2000 15 www.t-bird .edu It's the turn nowaglo company is to be or not. So, what will it is New Economy? Several things, not the least of which is an incredibly insightful strategy. by Lindsey Michaels "I f I were going to do an article on companies that have had really effective global strategies, I'd definitely look at General Electric, ABB, and Cern ex-the Mexico-based cement company-and Sony," said Dr. Andrew Inkpen, a Global Strategies professor at Thunderbird. "In cases I have written, I have looked at companies such as Warner-Lambert, Enron, Ericsson, and Honeywell. " At Thunderbird, Global Strategies is the study of how companies compete in a global environment. It looks specifically at why some companies succeed while others fail. The course is heavily case driven and is a 'capstone' course, which means that it is one of the most advanced classes students can take at Thunderbird. According to Inkpen, General Electric (GE) is the epitome of a successful global company. It's one of Wall Street's darlings-as in, happy shareholders just pocketed a three-for-one stock split in April. As a result every single share of GE stock that was purchased before 1926 has grown into the equivalent of 4,608 shares today-worth approxinlately US$235,000. That's serious shareholder value by nearly anyone's standards! Under CEO Jack Welch, GE has spent the last 20 years transforming itself from a somewhat sleepy appliance and lighting entity into a highly diversified global superstar. The company now derives about 40 percent of sales from its GE Capital finance group, as well as a sinrilar percentage from non-U.S. sales. It owns the NBC Television Network, has major medical and aviation units, and has spent the last year engineering one of the most remarkable ebusiness shifts yet undertaken by a former 'Old Economy' entity. So, just what is GE's global strategy secret? According to Leighanne Gibson '95, European e-sales manager for GE Medical Systems, competing through people is a major silent strategy. "Jack Welch IS everything you've read about him," she said. "He's entrepreneurial. He remembers peoples' names if he's met them even once. And I've never met a man with more 'presence.' But GE isn't just about Jack Welch; it's about 300,000-plus high energy and empowered people who know how to 'stretch' because the man knows how to build a team. THUNDERBIRD 53 /3 / 2000 16 "I know it sounds hokey," Gibson continued, "but we all carry around a little, laIllinated GE Values card. On it are GE's four 'Es.' They are energy, the ability to energize others, the edge to make tough decisions, and the ability to consistently execute. They keep us focused on driving customer satisfaction and living our Six Sigma values." Six Sigma is one of GE's four main strategic initiatives. The others are ebusiness, globalization, and an emphasis on value-added services. Until her recent promotion, Gibson was GE's European director of corporate sales. In that position, she managed a multicultural, multi-country, cross-functional sales team that was representative of GE's business model. "A key GE value is to be boundaryless, to go jointly to one account, say, an airline, and provide everything from the engines to the office and airplane lighting to the financing for everything," Gibson said. "Our competitors can't offer the whole solution, which gives GE a clear edge. The challenge is to identify the synergies amongst seemingly unrelated businesses." www.t-b ird .edu Although that 'total solutions' team approach sounds simple, it actually requires both a very different sales approach and a sophisticated technological backbone. "The magic is in the mindset," Gibson said. "With our new Web sites, our customers can get all of the price and product information they want online so we have to be able to 'think out of the box.' To go from being an order taker to a customer enabler. To look at our new ebusiness structure as ControlYourOwnDestiny. com." Gibson stressed GE's globalization and ebusiness initiatives require people to be even more culturally astute. "For one thing, each Web site has to be localized for each country. And they better be in the local language if you ever want to close that sale. But in addition to good sites, we need people who understand things like the fact that people in Southern Europe like to talk more before getting down to the sale, while people in orthern Europe are much more comfortable with e-technology and online transacting." During 1999, GE generated US$23 billion worth of sales in Europe alone, or just under one quarter of its total revenues. The company has now set up hundreds of dedicated Web sites for key European customers and is expected to transact more than a billion dollars online in Europe this year. GE-like Cisco and Cemex-has also significantly broadened its geographic and product scope through a highly successful merger and acquisition strategy. "M&As are probably among the most important strategic global issues facing companies today," said Inkpen. "They are closely linked to success and failure as companies look to diversify, locate positive partners, and achieve greater efficiencies." He added that good M&A's are especially critical for companies in fast-moving industries with short technology life cycles and when other forms of market entry are either too slow or less economical. GE, for instance, solidified its overseas position during the early 1990s when Europe's recession helped it buy Harrods' credit card portfolio, Avis' European commercial fleet operations and the Irish airplane leasing company, GPA Group-now AerFi Group-at significant discounts. The company has also capitalized on Asia's current financial woes by buying Bank of Japan and several other struggling financial services companies. Cemex, the fast-growing Mexico-based cement company is also M&A astute. The company has vaulted from No. 28 to No.3 in its industry during the last ten years and now boasts more than US$5 put out by their Boards," she day." Gadiesh said that in addition to with Michel Dell of Dell Computers, Stev THUNDERBIRD 53/3 / 2000 17 Leo Burnett, of the advertising company that bears his name . ........ t; DeII's striItIgIc principle was 'go direct.'· she said. ·Steve Case's .. organizing content to make It easy to 1CCeSS. Burnett's was pushing leading edge aeativlty and that feeling that no matter how good a cam-www. t-bird .edu billion in annual sales and operating subsidiaries in 30-plus countries. "We had to go international to survive," said Lorenzo Zambrano, Cemex's CEO and a Board member at Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM), with whom Thunderbird jointly runs its Masters of International Management-Latin America (MIMLA) program. "Our internationalization, however, has forced us to dramatically change our company." According to Zambrano, his company has capitalized on market downturns and employed an aggressive, yet intelligent, acquisition strategy. "We proceed in stages. First we perform an audit strictly linked to the acquisition operation. Then we do a quick due diligence 'x-ray' by one of our multidisciplinary teams. This group is formed by people specializing in production, communication systems, and legal and fiscal affairs. It is an important stage aimed at saving us from unpleasant surprises. Later, another team integrates our production standards with the help of local collaborators." To Thunderbird's Inkpen, this type of in-depth due diligence is absolutely critical. "Acquisition strategies, on average, do not create new shareholder value for the acquirer," Inkpen said. He cited a November 1999 study that was done by KPMG and which examined the 700 largest M&A deals done between 1996 and 1998. "Eighty-three percent failed to create value and 53 percent actually reduced shareholder value when measured by their ability to outperform the stock market or deliver profit increases," he said. "What was really amazing though, was that 82 percent of the executives who were interviewed in 107 of those companies thought their deals were successful. " Cemex's numbers clearly showcase its success. The company's operating cash flow has reportedly grown at a compound annual rate of 26 percent for the last ten years and its earnings increased 23 percent during one recent quarter. By all accounts, U.S.-based Cisco Systems, Inc. is another M&A THUNDERBIRD 53/3/2000 THUNDfRHIRD on Global Business Strategy 18 master. The company has acquired more than 40 companies since 1993 and has earmarked another US$lO billion for upcoming acquisitions. Cisco has also forged strategic partnerships with Intel, IBM, Sprint, US WEST, and KPMG consulting, as well as most suppliers. That combination allows Cisco to continuously acquire cutting-edge technology, leverage multiple in-country contacts, and employ an almost zero inventory supply chain strategy where Cisco can online test almost any part, made by any supplier, anywhere, before it's shipped. "Forty percent of Cisco's sales are already international," said Scott Hewlett '91, a Cisco business development manager who focuses on Latin America and Canada "Since 80 to 90 percent of all Internet traffic goes through Cisco routers, LANs, ATM switches, and network managers, we have to be ready when Internet usage explodes in Mexico, Brazil, Argentina, Chili, and other Latin American countries." According to Hewlett, venture capital funding for telecommunications systems in Latin America has risen dramatically in the last year-which is a boon for Cisco. The company has, thus, established offices in target countries and selected a native to run each. Cisco people in those countries work closely with the local staffs of strategic partners, such as IBM and the local telecoms, to reach their customers. "Localization is definitely a component of Cisco's global strategy," Hewlett said. "For instance, in some areas, Cisco is expanding its presence outside of Silicon Valley even in its acquisition strategy; as an example, the acquisition of Pirelli Optical to expand our fiber optic equipment. In other markets where the fiber network is not as extensive we are focusing on a wireless solution that provides our customers with a more appropriate solution to their access dilemmas. In the end," he said, "everything we do ties into Cisco's core vision of changing the way you work, live, play, and learn." • email addresses: Gibson: email@example.com Hewlett: email@example.com Inkpen: email@example.com Jennie Oleksak, '88, of Thunderbird's Business Information Services (BIS) group completed the background research for this article. www.t-bird .edu Wandia Musomba of Kenya and Cos mas Kimario of Tanzania prepare for interviews at Thunderbird's annual Internship Fair. STUDENTS DRESS TO IMPRESS AT INTERNSHI'P FAIR T und"brrd w,,", awash with busm"" suits in February as some three hundred students competed for over 500 interview slots at Thunderbird's annual Internship Fair. This year's event attracted 33 companies who were offering nearly 60 internships as well as full-time jobs. Each company pre-selected some candidates then filled their remaining slots with students they met at general sessions. "This year's event was so large that we invested in moving it offsite, to a nearby hotel, that could accommodate everyone," said David Martin, director of Employer Relations at Thunderbird. That meant renting presentation rooms and audio/visual equipment, as well as hiring buses that could constantly transport students between campus and the Fair. "But, we believe the results are well worth that investment given the number of quality student/ employer interactions that occurred." Although the Fair's main purpose was helping employers find talented, and needed personnel while providing significant skill-building opportunities for Thunderbirds, it also accomplished two other goals. First, it provided a forum by which companies could educate students about potential opportunities. Second, it gave recruiters a chance to target candidates for full-time jobs. "I thought it would be easy to make a decision," said Shalini Bath '99, a recruiter for Compaq. "It won't. I interviewed 14 people and all were really qualified. In fact, several would also qualify for the two full-time positions we have open." Bath was looking for an intern who could tackle a two-part project in Latin America "T-birds are great for Compaq," she said. "We need people who have new ideas, who dive right in, and who think out of the box. by Lindsey Michaels Everyone seems to notice that about Tbirds, where they might not see it in someone from Harvard or other Ivy League schools where people tend to be used to more formal systems." "You are very advanced electronically," said Iomega's David Tietjen. "Much more so than most other universities. I saw a ProFit recruiting software demo during a break, and the My Thunder-bird system and understand that you do much of your work online. That's great," he said. Companies such as Iomega gave two company presentations during the threeday event, then interviewed. Three other Phoenix-based companies gave presentations at the Fair, but will interview T-birds offsite afterwards. Ross Bouldin, who recruits for Johnson & Johnson International, said that the Fair gave him the opportunity to meet with students face-to-face, which, he said, was much more valuable than relying solely on pre-selected candidates. He looks for interns and pending graduates. "Johnson & Johnson International made 17 offers for full-time jobs to T-birds last year," said Bouldin. "That's more offers than we made to any other school." Not all companies, however, liked the double presentation format, which some found time-consuming. Students wanted even more general session contact, since it gave them the opportunity to both learn and sell themselves. Spencer Roeck of the U.S. was one of many students who benefited from that face-to-face contact Armed with five years prior experience with medical companies in Germany, _ Shalini Bath '99 THUNDERBIRD 53 (3 (2000 19 Australia, and the Middle East, he talked his way into interviews with several companies. "Overall, I think that it was a great way to get personal one-on-one time with recruiters and learn about their needs," he said. "Although only one company selected me for a pre-scheduled interview, I ended up getting interviews with four of my top five picks." Roeck added that one of those companies had already extended him a verbal internship offer. "This was a wonderful experience," said Wandia Musomba of Kenya. "At the very least, we got to practice our interview skills." Musomba, who was seeking a brand management position, obtained a Bayer interview. Her friend, Cosmas Kimario of Tanzania, obtained two interviews, including one with Citibank, which offered him an internship. Thunderbird regularly hosts Internship and Career Fairs to help students and employers find each other. Internships are especially popular with students, since they provide hands-on training, needed income, and the opportunity to both investigate and impress companies. Companies tend to use internships to screen potential full-time employees for skill and culture fit. About 40 percent of T-bird interns receive job offers from the companies they intern with. That's one reason students are asking alumni to help them find more internships. Twenty-three alumni recruited at this year's Fair. • Please contact David Martin at Thunderbird's Career Management Center for internship information. firstname.lastname@example.com YES A ROIl N D TilE W 0 R L D by Tatiana Poliakova '00 The world today seems inundated with stories of 'dot com' glory. There's news about novel techniques, new business models, and sophisticated interface platforms. Yet the simplest of truths is that good content is still king. Sanjyot Dunung '87, founder of AcrossFrontiers International (AFI), Inc., understands that fact. Born in India and raised in Liverpool, England and Chicago, Illinois, Dunung was flying back from Singapore two years ago when she first realized the potential of applying technology to deliver leading-edge culture and country information to travelers. So Dunung did just what you would expect a well-versed, entrepreneurial T-bird to do: she formed a sophisticated New York-based international culture and content company. "Forming my own company had always been one of my greatest ambitions," Dunung said. "AcrossFrontiers allowed me to harness this brilliant invention and revolutionary communication tool called the Internet to deliver innovative, and much-needed country, culture and global business content." AFI's award-winning flagship product, The Global Country Series, launched in 1999, provides international businesspeople and expatriates with in-depth knowledge of culture, sites, and facilities in target destinations around the globe. The products, delivered on CD-ROM or over Web platforms, provide hours of guided interactive, multimedia, computerbased training. advertisers, and other partner firms to reach even more customers. AFI is even working to bundle customized content for airlines and hotels through in-flight entertainment systems, as well as in-hotel, airport and Web TV respectively. Dunung credits her childhood, which was spent on the bridge between East and West, for her profound multi-cultural consciousness. She has always connected to her Indian heritage; in fact, she had her own cable TV talk show, called "The Voice of AcrossFrontiers International, Inc. is a new media content developer and distributor, and a global leader in creating, branding, and merchandising proprietary, cutting-edge and qualitydelivered country, culture, and business content that is effective, entertaining, and reliable. AFI curAs an Indian woman who was raised in England and America, Sanjyot Dunung's life has always bridged cultures. rently has six country products in its Global Country Series. An additional thirteen are in final development and slated for an August 2000 market launch. The company is comprised of three professional teams. The technology group develops and maintains the technical platform. The creative team develops the graphic look and feel. The content group develops materials for transmission through the New Media channels. This in-house team of 26 professionals is multi-national and as diverse as the content of AFI's products. Globally, AFI uses the services of over 150 country specialists. A few are Thunderbird alumni. Most have Ph.Ds and masters degrees in either business or the human sciences. Thirty-five other consultants lend expertise for content review. While good content is one reason AFI's clients include an impressive list of Fortune 500 companies, so too is good marketing. AFI utilizes traditional marketing venues such as direct sales, but also teams up with VARs (value added re-sellers), Web THUNDERBIRD 53/3/2000 20 the Indian Youth," when still quite young. Yet, one of her most life-changing experiences occurred while doing an undergraduate research project on India - U.S. relations at Northwestern University. Dunung wrote several letters to Indira Gandhi, then Prime Minister of India, and was eventually granted an interview. That is why in August 1983, Dunung found herself on an airplane headed back to her homeland. Everything about Indira Gandhi was admirable, said Dunung of her private interview-her posture, the natural gleam in her eye, her soft, gentle voice, and her graciousness. "Ms. Gandhi spoke with fierce determination and pride," said Dunung. "She was immensely proud of India, of what the country could achieve." The two also spoke at length about women's issues related to business and politics. According to Dunung, Gandhi believed that the quality of women's lives was directly related to business and economic cycles; that in times of economic downturn, women were the first to suffer. Thus, she believed that www.t·bird.edu women could improve their own plights by strengthening the economic conditions within their own countries. "That meeting taught me the importance and power of humility," she said, "and the insignificance of obsession with hierarchy and titles." It also taught her the importance of being accessible-and good-to others, regardless of who they are. Dunung clearly demonstrated that lesson at Thunderbird's eVe conference in Februruy. After leading what was easily one of the warmest and most inspirational of eVe discussions, Dunung attracted current T-bird students like a modem day Pied Piper throughout the day. In 1985, just two years after her interview with Indira Gandhi and a year after Ms. Gandhi's assassination, Dunung's drive and resourcefulness landed her an Indian Embassy invitation to a White House Press Corps dinner during the state visit of Rajiv Gandhi, Indira Gandhi's son and successor. Meeting such powerfulleaders on a personal level also made Dunung realize that of video, voice, and interactive components. Such training is often more time efficient and typically costs up to 75 percent less than instructor-lead training. Outside of work, Dunung is an accomplished writer and the co-founder and president of the Dunung-Singh Foundation, which helps provide educational opportunities and hope to underprivileged children. She is also a Member of the Board of Directors of the U.S. Committee for UNICEF (United Nations Children's Fund), where one of her duties involves helping form global charities at the corporate level to improve the lives of children in developing nations. Nestled in her cozy, but spacious Manhattan office, Dunung looks like a poster child for Thunderbird success. Pointing to the smiling faces of her husband and sons in the photographs upon her desk, she said, "Women still face considerable challenges when trying to grow their careers at the same time as they are growing their families." Part of the challenge remains cultural; part is personal, she said. To demonstrate, Dunung told of her experiences while working for a Japaneseowned bank. It seems that any time she was asked to work late or atfend a business dinner, her boss would first ask if it was OK with Dunung's husband. "It was as if I didn't have a say in the matter," she explained. Now her New York-based AcrossFrontiers International company helps businesspeople bridge cultures too. Today, Dunung's life is somewhat easier because she's the boss and her husband works along side her. But, as a senior executive and business owner, Dunung is concerned about how hard it remains for female executives to balance work and family-€ven in the U.S. She's especially disappointed when promising young women feel that they must drop out of the labor force to start their families. "Men often have more opportunities to find mentors in the corporate environment, and promotions are often based upon such relationships," she said "There aren't many network groups especially for mid-career female executives anyway, but women who temporarily leave the workforce to raise their children face the very real added burden of having to totally anyone could rise to power, as long as they had strong convictions, a little luck, and were not afraid of hard work and responsibility. That insight-that we are all created equal and able to succeed-was such an immensely powerful message for Dunung that it became the driving force behind her own career and life. As an entrepreneur, community leader, wife, and mother of two preschool-aged boys, Dunung's life is full to say the least. Last year HR Executive Magazine named AcrossFrontiers' Global Country Series™ its "Training Product of the Year." One reason is that AFI's programs help users gain insights into the mindset and the motives behind people's thoughts and behavior, rather than just providing lists of do's and don'ts. A second is that AFI's core software bridges intellectual content with technology comprised Sanjyot Dunung 'B7 THUNDERBIRD 53/3/2000 21 rebuild professional networks once they return." As a result of such concerns, Dunung allows women on staff at AcrossFrontiers to telecommute whenever possible. AcrossFrontiers plans to produce 40 new products this year alone-which will make Dunung's battle for balance even more challenging. Yet, after meeting and spending tinle with her, one gets the feeling that Dunung learned those early Gandhi lessons well and that she will succeed at whatever goals she sets and on whatever teIDlS she chooses to define. In the meantime, CrossRoads, a Northeast Forum for the venture community, just selected AcrossFrontiers as one of two business opportunities that it believes will success exponentially. That organization reviewed 175 companies. • Dunung rnay be reached at: email@example.com www.t-bird .edu .. -BIHDS OF TODAY THEY ARE AMONG THUNDERBIRD'S FIRST GRADUATES OF THE NEW CENTURY. THEIR AVERAGE AGE IS 29; THEIR AVERAGE GMAT OVER 600. FIFTY PERCENT ARE NON-U. S. NATIONALS; IN FACT, THEY REPRESENTED 52 COUNTRIES. TWO OF EVERY THREE ARE MALE. NEARLY ALL HAVE LIVED AT LEAST A YEAR OR TWO ON 'FOREIGN' SOIL. SO, WHO IS A 'TYPICAL' T-BIRD? HERE ARE FIVE CLASS OF 2000 PROFILES. Northwestern's Kellogg business school, was just going to spend the surruner here. But two years so reluctant to leave the School that Thunderbird hired him. "I knew within the first week here that 2hII1m'-M8..w Thunderbird will be in my blood, no matter where in the world 1 go." pily ensconced in London, working as a banker, when his father sent him back to school. El-KhaJiJ at Thunderbird and pursued finance. "I got all the way through FORAD (one -·..w........rmderb· p finance courses) before 1 finally realized that I'm more of a people guy." "BEING AT Most people who know El-Khalil would definitely agree. THUNDERBIRD IS LIKE He worked tirelessly on the Foundations team for five trimesters, spending two as a team BEING IN AN OLYMPIC leader and three as captain. Foundations is a new, mandatory, two-week class designed VILLAGE. YOU DON'T to help people acclimate to Thunderbird, group work, America, and the EVEN REMEMBER concept of going back to school. "My first Foundations team carne from THAT YOU ARE IN THE different backgrounds, different walks of life, yet it was amazing how STATES UNTIL YOU GO fast we were able to bond, work together, and welcome 500 new stu-dents. We became a little family. OUT THE GATE." "Thunderbird is a microcosm of the world," El-Khalil explained. "It's opened my mind to other cultures, people and society-made me a better person. At the end of the day, it's relationships that matter and 1 now know people throughout the world that 1 can lean on, and who can lean on me, in good times and in bad," he said. "So, even if 1 hadn't gone to any classes, just interacted with all the students, 1 would have corne out of Thunderbird a better manager than most people do from other schools. " GAIL GIBFORD, THE UNITED STATES e reasons 1 did well in my interviews and got my various offers was because my perspective was so different, so global,» said Gail ho chose a brand management position. "I accepted the UniJever job because it was one of the most broad, most global companies 1 work in the U.S. but with people from all over the world. Most other companies 1 talked with had primarily U.S. nationals on staff.» n"_ .'!.I,ending nine years in sales and marketing positions with Kodak and Xerox, Gibford began researching business schools. When she ople that she wanted to someday be a country manager in Latin America, they referred her to Thunderbird. verything 1 wanted in a school 1 got at Thunderbird," she said. "The language. The culture. But more than anything else, it opened up my mind and gave me a real non-U.S.-centric worldview," she said. "I mean, the first time you meet with your small group for most classes, the first negotiation point isn't how to divide up the work. It's what language you're going to conduct group meetings in." "MY FONDEST MEMORY WAS CARRYING THE U.s. FLAG While at Thunderbird, Gibford took brand management classes and served as the student director of the Thunderbird Global Brand Center. That position placed her in daily contact with powerful corporate contacts. "The best thing about Thunderbird isn't just the students and faculty-who have gone way beyond that DURING A FLAG CEREMONY," role to become my friends and mentors-it's the chance to work with GIBFORD SAID. "AS AMERICANS, amazing people like Sam Garvin and Rick Baer of WE ARE SO INTRIGUED BY Continental Promotion Group-who took me under OTHER CULTURES THAT WE wing. FORGET HOW GREAT OUR "What we have here is so much more than Harvard, COUNTRY IS. THAT REALLY HIT where they talk about their peer association and proME AND 1 SUDDENLY FELT EXTREMELY PATRIOTIC AND PROUD TO BE AMERICAN." fessional contacts," she said. "Here, we talk about our friends-people we can truly count on at any time all throughout the world" THUNDERBIRD 53/3/2000 22 www.t -bird .edu ~ACE GAONA GUILLEN , MEXICO "I TRULY THINK She' already earned a master's degree in infornlation systems from Lausanne University in Switzerland, then THUNDERBIRD IS ONE OF 'tched to the finance field. She knew she wanted an MBA, preferably from a U.S. university, but Monterrey, 'co-based Grace Gaona wasn't willing to quit her job to obtain that goal. That's when the French, English and THE BEST UNIVERSITIES h-speaking Gaona happened upon an advertisement explaining a new distance learning program being co- [N THE U.S. I LEARNED oped by Instituto Tecnologico y de Estudios Superiores de Monterrey (lTESM) and Thunderbird. SO MANY NEW THINGS "I had known and hired Thunderbird graduates, so I knew the quality and the reputation of THAT I FEEL LIKE I HAVE the university," Gaona said. "I thought that that was the perfect program for someone like me." Two years later, Gaona and 103 of her classmates are graduates, having earned dual degrees from both universities that were celebrated on June 30 during the first-ever Master's of International Management Latin America (MIMLA) commencement at Thunderbird. A COMPETITIVE ADVANTAGE OVER MY COLLEAGUES." "Distance learning is a new paradigm that anybody used to traditional education will have to adjust to, " Gaona said. "One has to be very brief and clear on a broadcast ... but now I'm not camera shy and I can talk out loud anywhere. That's a plus." She added that the initial ten-day orientation trip to Thunderbird, Dr. Anant Sundaram's advanced managerial finance class, and Dr. Christine Grosse's English business language course were three definite highlights. MARK LESLIE , THE UNITED STATES Som: call him Mr. eVe. That's because Mark Leslie was a standout student leader in the quest to bring leading ge entrepreneurship, venture capital, and ecommerce (eVe) awareness to Thunderbird. Not surprisingly Leslie joined Services. com, the Internet wing of Evolve, a Silicon Valley-based Professional Service ation (PSA) company. "lot an internship at PeopleSofi, with the help of Chuck Hamilton '91, as an ebusiness strategy consultant returned hungry to get into ebusiness," he said. "I loved being involved on the front edge, on things that hadn't even trickled down to stock analysts .. . The whole experience rocketed me right out of my shoes." Leslie had been living and working in Hong Kong in the early 1990's when he stumbled across some T-birds he termed 'open, generous, and very cool.' "After getting some more international business experience, I wanted to strengthen my formal business skills and catch up on where the U.S. market was going since it was driving Asia," Leslie said. "Thunderbird expanded me way beyond what I would "IT'S NOT JUST A have thought was possible." PLACE YOU COME While Leslie highly recommended Thunderbird's ecommerce, competitive TO GET A PIECE OF intelligence, strategic services marketing, decision modeling, and competitive PAPER. IT'S A strategy classes, he said, "Ten percent of the Thunderbird experience takes place PLACE YOU COME in classes. The other 90 percent involves interactions with people: students, fac- TO CHANGE YOUR ulty, alumni, and campus activities. They are the things that really light you up and make you invaluable." LIFE." y 16 years old when I set my heart on coming here. Now I'm standing at the gate, about graduate. It has all been very special for me, like a dream come true." Yo IDose first heard about Thunderbird from her cross-cultural communications professor m 'ing. She ml\iored in finance and finished her undergraduate school in business, spent . t years working with Deloitte & Touche International, Motorola, a large Chinese trading firm, and Prudential Insurance Company of America before coming to Thunderbird. A scholarship award winner, Klose worked in Thunderbird's Communications office and did a financial internship with General Electric in florida before accepting a business analyst position with Exxon Mobile. That position will provide Klose with three rotations during the next five years, which may provide opportunities for work abroad. "When I did my finance Wi nlm-im on Wall Street, someone who was very familiar with Exxon met with us. I was really inlpressed with the speaker, the energy industry, and the company itself." Klose said she chose Exxon because it is a world class company with operations anywhere that she might ever want to go, and because the company representatives treated her extremely well. "I er\ioyed meeting with people at Exxon. They are very professional and they left me with a very good feeling." KLOSE, WHO SPEAKS ENGLISH, MANDARfN CHINESE, AND JAPANESE, CAN SEE HERSELF WORKING BACK IN THE ASIA-Klose said she loved all of her finance classes but termed FORAD her favorite. "We did a multi-national business PACIFIC REGION A FEW finance sinlulation project," she said. "There were seven financial periods and we all started with the same facts about the company and its two foreign subsidiaries. It was a competition to see which group could achieve the highest share price at the end of the 7th period through good operational and financial management. And it was a lot of fun. " YEARS FROM NOW. THUNDERBIRD 53 /3 / 2000 23 www.t -bird .edu by Jim Anderson '80 In May 1999, a very high-level government delegation appeared in Silicon Valley and was received with the appropriate deference and curiosity due an Asian super power that had successfully reinvented itself since WWll. The group's goal, of course, was to find and recreate the rich creative economic environment that makes Silicon Valley a key driver of the 'New Economy'. Its search eventually led the group to Silicon Valley Bank. But, could anyone easily define the elements that sparked the greatest wealth creation in history? Good question. The Asian group's quest formed a perfect counterpoint to the work that now fills 100 percent of my professional life-guiding, mentoring and raising money for the start-ups of the new economy. This article looks at the macro factors underlying the valley's entrepreneurial environment as well as some critical success factors for companies now under construction. The Silicon Valley Elixir The core elements that drove the explosive growth in Silicon Valley are now well documented: GREAT UNIVERSmES: At the cornerstone are great universities that attract the top global engineering, biochemistry, computer science, and physics talent. The ideas born in the labs at Stanford and Berkeley frequently find their way into commercial enterprises only a few miles away. HIGH RISK CAPITAL: Massive amounts of high risk capital have been invested to support these entrepreneurs. In 1999, according to Venture One, $36.5 billion was invested in the U.S. involving 2,969 equity rounds. Fully 27 percent of these transactions were with California-based companies. The exceptional returns that venture investments produced in the last three years have prompted limited partners, pension funds and state agencies, to increase their allocations to the asset class-resulting in a record $24.6 billion raised in 1999, a 68 percent increase over the prior year. With some returns in the thousands of percent, many venture capitalists live in dread of turning away the next Yahoo, Cisco or Ebay. These VCs now listen to as many stories as possible even though they don't have enough resources to properly evaluate all of them. The huge creation of wealth in the past eight years has also created a group of individual investors who can deploy capital much like the venture funds. In 1999, these so-called 'angel' investors financed more than 30,000 entities in the U.S.-<leploying total dollars that were on par with institutional funds. Each generation of risk takers expands and deepens the pool of capital in the hands of those who view themselves as creating the forces to shape the future. The impact of these angels is already being felt; however, wealth alone does not ensure success, as the following experience spotlights: Peter Carrie walked into the conference room, his crn and marketing manager in tow. Tension was high. Peter was a brilliant young engineer, a true six-sigma man. Founder of a company he'd already sold, Peter had netted $65 million. As an angel investor, he had provided the $4.5 million that allowed my client to acquire a great team, finish its product, and get it into three beta test sites. I now had the group in front of some of the best investors in its sector. As a former engineer myself, I immediately saw that Peter strug- * Ficticious company and individual names used th:rouglwut to ensure canjidentiality. THUNDERBIRD 5313 I 2000 24 gled with the imperfections of a world involving humans. To resolve his frustrations, he wanted to fire his CEO, risking the departure of the core management team that was loyal to its CEO. As Peter worked through some options, he quickly assigned probabilities to each occurrence-reducing each possible path to a mathematical formula that changed the relative value of his investment. He distilled several complex scenarios involving 10 different people into a core probability and a number. I spent two hours trying to convince Peter to let management stay until financing was secured. I failed. The next day the CEO resigned and six top executives left with him, effectively decapitating my client and ending my engagement. THE ROLE OF GOVERNMENT. Much to the chagrin of visiting world delegations, Silicon Valley developed without government intervention. Most entrepreneurs believe that government action is an anathema to the expansion of the New Economy. Government rules and regulation, even if designed to promote investment, usually distort incentives to the point that the creative talent goes elsewhere. The rapid growth of the Internet business model has occurred despite various government attempts to tax, channel, or control it. In fact, in the U.S. most politicians prefer to kowtow to the Silicon Valley wealth in hopes of obtaining a few million dollars for their next campaign. ENTREPRENEURS AND THE CULTURE OF THE NEW ECONOMY. First postulated in Paul Romer's New Growth Theory, the essence of the New Economy is that wealth creation is driven by human imagination- not the traditional economic theory bedrock of capital, raw materials, cheap labor, and a management to organize them. Romer's theory places the highest value on human capital-which is consistent with the core traits you find in Silicon Valley: • irreverence for traditional views and bureaucracy • acceptance of failure • rapid adoption of new ideas • high valuation of creativity and imagination • belief in the power of the individual to produce changes Why is this culture important? Because it attracts the best entrepreneurs. You see, engineers top Silicon Valley's social structure, not old wealth or politicians. The Entrepreneurs and their Start-ups: What does it take to raise money and succeed in this environ-ment? Here are some basics: • address a large market with a big vision; • recruit a team with deep expertise, passion and conviction; • create a unique and proprietary value proposition; • build a product that scales in a non-linear relationship to costs; • be first People are the core value of any company. For a start-up, individuals are the most important factor. We look for passion and tenacity in a management team: In March, 1999, two founders of World Link arrived at the bank with a big idea: create a global supply-chain management software company using a centralized rather than client-server software model. The two intended to facilitate the purchase and tracking of inventory right through to the raw materials. They had no resources other than their own experience, bold conviction and tenacity. Working with Gerry and Ron, we took their plan through numer- 0us major revisions, and looked at three acquisitions, finally settling on one core licensing deal, which took months to structure. We spent so much time together that they moved into our offices. We changed the name of the product and the core technology. We THUNDERBIRD 53/3/2000 also obtained a funding commitment from an Asian source, which, at the last minute, fell through. Despite all these months of turmoil, the World Link team persisted, ultimately signing a customer, hiring a team and eventually winning funding from top-tier VCs. This is the essence of Silicon Valley: two engineers with a plan can racket their net worth to $25 million in 12 months. Your vision should be huge: world domination is acceptable. I was looking at a long table covered with various devices to download and play digital music. Across from me sat the 23 year old CEO of eSongs. For two hours he explained in detail the current workings of the music industry and how music like software was an intangible. Music had been digitized during the conversion to CDs so it was obvious that all music distribution would shortly be done over the Internet. Billion dollar investments in elaborate distribution channels-including radio stations, recording companies, and music stores-would become worthless. Artists would develop direct relationships with their fans, enhancing their own wealth and greatly increasing the variety and richness of available music. Record companies would no longer control what we listen to. The ability to adapt quickly to change is essential. Willingness to walk away from cherished assumptions is also a core competency. And speed means changing course in days not years. I sat with Tony and Susan in their modest house in the Los Altos Hills reviewing a $30 million bid for their company. Eighteen months ago that house had been filled with employees. It had multiple T-l lines delivering huge Internet bandwidth. They couldn't afford office space and had not paid anyone in weeks. On the brink of personal bankruptcy, Tony and Susan had struggled to understand why their professional services business was not winning customers. They had recruited top engineers from India But, like a surfer waiting for the right wave, they had begun to tire. Then they began building very sophisticated Web-sites in record time-and the wave hit. For Tony and Susan, that adaptability was now worth $30 million. Conclusions So can the Asian delegation recreate Silicon Valley's unique business culture? The answer is: no and yes. Governments by their very nature constrain creativity and entrepreneurship. In many countries, the historical concentration of wealth, high taxes, bureaucracy, resistant unions and stifling monopolies form strong barriers to the New Economy. But Silicon Valley's New Economy ideal is spreading. In the U.S., all major university centers now attract venture capitalists and billions of investment dollars. American VCs are also moving abroad in search of opportunities, investing $4.8 billion in Europe in 1999 alone as Europeans race to catch the wave. Incubators such as Gorilla Park in Amsterdam and Sillywood in Stockholm are the vanguard of Europe's future New Economy success. The vibrant entrepreneurial culture in Andhra Pradesh in southern India has also started an explosion of Silicon Valley-style start-ups. As environments change, countries will be able to retain good people and ensure success. Such people are key catalysts so the environment must attract and support these entrepreneurs. If it does, we might see the foreign students-who compose a significant portion of the engineering talent at Stanford, Berkeley and MIT-heading back to their home countries to capitalize on a budding environment that is as rich and fertile as Silicon Valley. • Jim Anderson is managing director and president of SVB Securities, Inc., the broker-dealer subsidiary of Silicon Valley Bank. He may be reached at firstname.lastname@example.com. 25 www.t - bi rd .edu SILICON VALLEY FORUM ADDRESSES 'NET' ISSUES FROM ALL ANGLES Making the Global Net Watt was both the name of the latest Thunderbird Global Business Forum and an apt description of the event itself. Held in Silicon Valley, the half-day event drew nearly 300 people- who networked unabashedly-and featured presentations by members of some of the New Economy's leading companies. Alan Cohen, a senior director of marketing and business development at Cisco Systems gave the keynote address, discussing some of the more challenging aspects of globalization in the New Economy. Two panel presentations followed. The flrst was moderated by Barbara Kamm '77, who is executive vice president and managing director for Angels/ Incubators at Silicon Valley Bank, and dealt with a variety of funding issues. Panel members included Christine Comaford of Artemis Ventures, Lee Hansen of Net Value Holdings, and Chris Johnson Keith Powers '99, who attended the forum, is a master networker. He and his MyFreeCar.com have been featured on most of the major national television news shows. by Lindsey Michaels Forum attendees leverage their own network during speaker breaks. '86 of Bank of Nova Scotia Comaford has founded five successful startups and secured over $100 million in flnancing. Hansen helps uncover and develop 'next generation' ebusinesses. Johnson founded the Technology and Electronics group at Scotia and works to secure venture capital for more established entities. The second panel was moderated by Thunderbird's own chief information officer, Rich Zbylut, and examined many of the technological and cultural challenges related to globalizing one's ebusiness strategy. That panel included Jorden Woods, co-founder and chief technology officer of GlobalSight-which was recently named one of the 'Top 50 Private Companies' by Red Herring magazine. The other panelists were Robert Witchel, international business development manager for E*TRADE, and Clay Conrad '80, who is the vice president of affiliate marketing with OpenTV. "I originally got involved with this Forum out of the goodness of my heart because it was Thunderbird," said Kamm. "But as the event got closer, it became very clear that this was an outstanding opportunity for Silicon Valley Bank, especially given our increasingly global approach to business and planned expansion." The Forum allowed Kamm to showcase her bank to members of the Silicon Valley and global ebusiness community since it was attended heavily by non-Thunderbird alumni and technology reporters from as far away as Germany. It also attracted more than two dozen current Thunderbird students who were on a two-week Silicon Valley Interim, as well as dozens of other THUNDERBIRD 53/3/2000 26 www.t -bird .edu students who either commuted from Glendale or were on internships nearby. Silicon Valley Bank and Kamm hostedand actively recruited-the interim students for several days. "We have plans on the drawing board to sign a major international expansion," Kamm said, and I expect to have at least 200 new open positions. Where better to go than Thunderbird for people who understand the global community?" Thunderbird Global Business Forums are designed to enhance the School's brand recognition by providing leadingedge training on a variety of topics in several regions throughout the world each year. Most Forums provide a mix of realworld practitioners and Thunderbird professors who offer timely, hands-on insight. Since Thunderbird also sends a full Admissions, Career Services, Executive Education, and Alunmi team to each event, the Forums are also outstanding recruitment venues. The Making the Global Net Work event was sponsored by Continental Promotion Group and Silicon Valley CONTINENTAL PROMOTION GROUP INC. T f Silicon Valley Bank Bank. Three other ebusinessrelated Forums will be held in September in Shanghai, Tokyo, and Singapore. Another Forum will also be held in Glendale as part of the School's November Homecoming activities. For more information, please contact Kathleen Jackson '91, director, Thunderbird Global Business Forums. She may be reached at jacksonk@tbird. edu or (602) 978-7084. • THUNOERBIRD 53/3/2000 27 www.t-bird.edu Alan Cohen of Cisco Systems combined humor with some sobering facts. Robert Witchel of E*TRADE entertained the audience with ads Flavio Lebrao '00 of Brazil said that Thunderbird's top ranking was a major factor in his decision to attend. • T-bird Ranked No.1 for 5th Straight Year The April 10, 2000 issue of U.S. News & World Report magazine named Thunderbird first in the nation in the specialty of international business. This is the fifth consecutive year in which the School has been ranked No. 1 in this area. In the category of international business, the magazine listed the nation's top ten schools, which are, in rank order: Thunderbird, South Carolina, Wharton, Columbia, Harvard, New York University, Michigan- Ann Arbor, Stanford, UCLA, and UC-Berkeley. The international business specialty area ranking in the magazine was part of the magazine's annual survey of the nation's best graduate schools. In the magazine's rankings of the top 50 U.S. business schools, Thunderbird was 34th overall. As components of the overall ranking, Thunderbird was rated 22nd in reputation among corporate recruiters, and 32nd in reputation among academics. US News & World Report produced its ran kings based on several criteria, including admissions and placement statistics as well as surveys of institutional reputation among corporate recruiters and business school deans. WWW.T-BIHD.EDU • Financial Times Gives High Marks to Exec. Ed. The May 23, 2000 issue of the Financial Times lists the executive education programs at Thunderbird as 17th overall in the paper's annual international ranking of business school courses for executives. In the same ranking last year, Thunderbird was ranked 20th overall. In the new ranking, Thunderbird's open enrollment progranls for executives were ranked 14th overall. The school's custom executive programs for corporations were ranked 19th overall. Thunderbird is the only school concentrating in international management to appear in this international ranking of top business schools. Thirty business schools from around the world were included in the ranking. The top 20 business schools in the Financial Times' 2000 executive education ranking were: 1) Columbia, 2) Kellogg, 3) IMD, 4) Harvard, 5) [tie] Michigan and Wharton, 7) Duke, 8) Virginia, 9) lese, 10) [tie] Cranfield and Insead, 12) [tie] London Business School and UNC, 14) Ashridge, 15) THUNDERBIRD 53 /3/2000 2B [tie] Instituto de Empresa and UCLA, 17) [tie] REC and Thunderbird, 19) Stockholm School of Economics, and 20) Western Ontario . • First Thunderbird 2000 Class Graduates There were 410 of them, representing 52 countries. Some two dozen took children, ranging from newborns to teens, with them when they marched across stage April 28, 2000 in the Sundome Center, Sun City West, Arizona. Several publicly thanked parents or their spouses. Others spoke heartfelt words of grief or gratitude. One even did a pretty impressive stand-up comedy routine. They were diverse, worldly, and yet, incredibly united. They were Thunderbird's first graduating class of this century. Thunderbird is such a closeknit community that making it through graduation day without being profoundly moved can be difficult. Families reassemble. Flags from throughout the world unfurl. Friends who have become inseparable attempt to pry themselves apart. Pride and tears co-mingle. Then, parties and packing eventually begin. This year's graduates got words of wisdom from Roy Valee, president and CEO of Avnet, a US$lO billion electronics entity. Valee shared some of the lessons he has learned from his 29-year career. "Globalization, industry consolidation and competitive collaboration will influence where you work, who you work for, and even who you work for in the future ," he told the group. "You must determine what is most important to you. Is it constant challenge, good health, family or faith? .. . You must decide whether you truly want to be a pioneer or simply get rich quick." www.t-bird .edu • One of the youngest 'future T-birds' graduates with Dad. Roy Valee and his wife Cindy pose with Roy Herberger before the ceremony. Jordanian student Nassim Majdalawi '~O watches local Cub Scouts plant a tree honoring Jordan's late King Hussein at Thunderbird. Majdalawi was visibly moved that Glendale elementary students chose to honor his late king. • Elementary Students Plant Tree Honoring King Hussein at Thunderbird They had definitely done their homework! Thirty students from Glendale's Bellair Elementary School had been studying the Middle East last year when Jordan's King Hussein passed away. As a result, they wanted to send Queen Noor a condolence letter. When she graciously responded, they decided to plant a tree of peace in Hussein's memory at their school. That relationship blossomed and expanded to include both Jordan's new king and members of a Glendale Cub Scout troop to which several of the Bellair students belonged. The two groups decided to plant one more tree and so wrote again to their friend Queen Noor asking if there was anything special she wanted them to say. She responded with this quote from the Prophet Mohammed: "If the resurrection day carne while a sapling is in the hand of one of you, he shall plant it and thus he will be rewarded." At approximately that same time, one of the children's parents attended the Message of Peace lecture that Jehan Sadat, the former First Lady of Egypt, gave at Thunderbird. That parent, a Cub Scout leader, then suggested that the children place their new tree and the accompanying plaque at Thunderbird for people from throughout the Middle East and world to see. The children did so in April, providing a very well researched and heartfelt presentation to all members of the Thunderbird community- including Jordanian T-bird student Nassim Majdalawi, who took part in the ceremony and seemed so appreciative of the students' efforts. • For Executive Education Alumni, The Learning Continues Over 30 of Thunderbird's 180 EMIM graduates returned to campus for the 4th Annual EMIM Alumni Learning weekend. The theme for this year's April 28-30 session was 'The New EconomyWhich Direction to Take' and focused primarily on merger & acquisition, e-commerce, competitieve intelligence, and globalization- related issues and strategies. Ron Valee, CEO of Avnet, a US$10 billion electronics distribution company that employs 10,000 and serves customers in 60 countries, was this year's keynote speaker. Valee astounded attendees with his intimate knowledge of industry issues, his personal charisma, and his candor in sharing data about his own company. "The Annual EMIM Alumni Learning Weekend is part of Thunderbird's ongoing commitment to helping our alumni retain their competitive advantage," said Barbara Carpenter, senior director, EMIM at Thunderbird. "We work very hard at bringing in leading edge industry practitioners and THUNOERBIRD 53/3/2000 29 facility who can share firsthand experiences and real-life cases." Carpenter's group also helps EMIM alumni, who went through the two-year program as a team, forge effective networking relationships with alumni from other years. "For most EMIM alumni, who already have huge family and business responsibilities, taking that much time out of our schedules to prepare the cases and attend the 2 1/2 days, requires a substantial time investment," said Mike Hecomovich '97 (EMIM), president and CEO of Global Marketing Services. "But the timely content, networking opportunities, and opportunity to shift back into the learning rnindset provided such an outstanding return on that investment that I've already committed to prioritizing my attendance again next year." Hecomovich said that going through Thunderbird's EMIM was similar to his experience in going through the U.S. Naval Academy in terms of challenge and camaraderie and added that Carpenter and her team "place a tremendous value on further enriching us each year." Thunderbird is also working at aggressively expanding its EMIM and other executive education offerings globally. • T-birds Win Top Honors in Business Plan Competition T-bird students Bernd Stomphorst and Ingo Haussman won graduate honors in Arizona's firstever statewide, intercollegiate business plan competition hosted by the University of Arizona's Karl Eller Center. Their winning proposal focused upon the creation of a one stop online tool called "Taxreclaims. corn" for investors to implement a foreign country withholding tax strategy. The team won $3,000 for its winning proposal. The University of Arizona, Thunderbird and Arizona State University students had the chance to share their plans with business and investment-sector professionals. www.t-bird .edu Bob Moran's cross-cultural communications book has become 'the book' in its field during Moran's nearly 25 years at Thunderbird. • Three Outstanding Faculty Members Honored Three outstanding Thunderbird professors were honored by their peers at Thunderbird's recent Faculty Luncheon. The three were long-term cross cultural communications specialist, Bob Moran, an Executive Education professor and interim chair of the Department of International Studies who was recognized for his outstanding books and articles; Jutta Ulrich, an associate professor in Modem Languages, who was honored for implementing Thunderbird's first all-online German course; and Brian Heathcotte, a finance professor in World Business who was honored for exceptional service to Thunderbird. John O'Connell, chair of the faculty senate, presided over the event, which also included comments by T-birds Roy Herberger, John Seybolt and John Staczek. • Global Week Attracts Impressive Array of Speakers Executives from several leading New Economy companies shared their expertise with students, staff and faculty during Thunderbird's annual Global Week. Sponsored by Thunderbird and USWeb/CKS, Global Week included informative sessions with executives from Bain Consulting, USWeb/CKS, Korn/Ferry International, Goldman Sachs, USA, Sprint PCS, CertCo, Internet Crossing and Wireless Facilities, Inc. Topics included "Strategic Alliances in the Digital Economy," "Online Trading: Changing the Nature of Finance," and "E-branding: What's Coming and How to Prepare for it." Global Week is organized primarily by Thunderbird students and all sessions were open to the Thunderbird community and surrounding public free of charge. • Thunderb ird Hosts Pre stigious Language Conference Thunderbird welcomed nearly 400 people from 50 states and 13 countries to the four-day Thunderbird/ EMU Conference on Language Communication and Global Management. The event, which was held in April, was the largest conference of its kind ever held in the U.S. and brought together an international field of experts on nearly every as
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