2009 Dumbest Moments in Business

2009 won’t be remembered as a year of good business.  Many courageous and noble things have undoubtedly taken place, but the bad and ugly have stolen the spotlight.  Fortune Magazine highlights what it believes to be the “21 dumbest moments in business” in 2009.  It is worth the read…

http://dumbest_moments_in_business

Trimming Fat

During the toughest economic stretch in 70 years, we get more than our daily dose of bad news from Wall Street.  I’m here to offer some cheer.  People live longer in tough economic times.  Seems counterintuitive, but it plays out statistically.  A recent Fortune article by Geoff Colvin, Fewer Deaths During a Recession, captures this relationship.  In the article, Colvin cites research by Christopher J. Ruhm, an economist at the University of North Carolina, who demonstrates that a 1% rise in the unemployment rate reduces the death rate by 0.5%.  Detroit by all measures must be the healthiest city in America.  This correlation is not only true for the United States but plays out in Spain, Germany, and all 23 OECD countries in aggregate.

Not only do death rates decline, but general medical problems become less prevalent during tough economic times.  Smokers cut back on their smokes and couch potatoes go mobile.  One might assume that the reasons are rooted in economics alone, but they aren’t.  According to Colvin,  “Strapped consumers apparently aren’t getting fitter because they must bike to work and survive on oatmeal and turnips.”  The real  reason seems to be extra free time.  Not having a job leads to more time for exercise.  Exercising non-smokers trim fat, and exercising smokers smoke less.

So, during this time when all of us feel pinched, let’s celebrate the collective pounds we’re shedding as a nation.  Put down those cigarettes, enjoy your leisure, and offer a grateful ”shout out” to lethargic consumer confidence, flat GDP, and anemic in-store sales.

Reframing Business Education

Reframing Business Education

Whether bearish or bullish about the economy, there is no denying that business and management education are in a state of turmoil.  The “new normal” will likely be something we’ve never seen before.  A recent story on National Public Radio (NPR) captures this sentiment:

American Business Schools trained many of the people who had their hands on the tiller when the nation’s economic ship ran aground.  Now, those in leadership positions at top business schools are asking themselves what degree of responsibility they share.

The Schools had critics before the economic crisis cost millions their jobs and their retirement saving.  Now, the critics are louder, and the questions they raise are being taken more seriously.[1]

Anger germinates, even abounds in this current environment, but not all agree about what should be done.   In the same NPR story, Jay Light, Dean of the Harvard Business School (HBS), and Stephen Kaplan, Professor at the University of Chicago’s Booth School of Business, paint contrasting pictures of the current state of affairs in business education.

Kaplan takes an optimistic view of the status quo, arguing that the reasons for the current crisis are multifaceted and cannot be attributed to MBA education alone.  He states, “You look at the business world and the global economy since 1980, and it’s stunning.  Productivity growth around the world has been terrific.  You know, where did all this come from?  There’s a huge success story of the tools of markets and economics that are taught at business schools.”

Light, alternatively, argues that the present crisis should serve as an opportunity for deep introspection and change. In fact, he has commissioned a Harvard faculty team to lead such an effort to ensure that the current moment is appropriately seized.

Wherever you fall in this debate, it’s clear we’ve approached a fork in the road, and the direction we choose will have important implications for the future.  Business, with its far-reaching and increasingly interconnected stakeholders, will have difficulty absorbing the highs and lows of un-reigned market forces.  Consider the chaos of just the last ten years:  the dot.com run-up and bust; Enron and a myriad of other corporate scandals; the housing bubble and sub-prime collapse; and the ensuing credit market meltdowns, just to name just a few.

In my role at Seattle Pacific University (SPU) as Director of the Center for Integrity in Business, I work alongside those in the academic and business communities to re-imagine the role of business education in light of this unprecedented crossroad. This work takes on many different complexions, but one area of focus for us has been to reframe—maybe more accurately, elevate—the purpose for business as taught and modeled to students.  In doing so, we’ve created an intentional break from famed economist, Milton Friedman, and his prevailing view that the ultimate purpose of business is to increase shareholder wealth.  While we don’t deny the integral nature of profit in business at SPU, we believe the highest purpose of business is to serve—first, by providing goods and services that enable communities to flourish, and second, by providing meaningful opportunities for persons to express aspects of their identity in meaningful and creative work.  As business serves communities well, long-term financial health and profits have ample opportunity to follow.

Jeff Van Duzer, Dean of the School of Business and Economics at Seattle Pacific University, challenges those at the intersection of Christian faith and business to redefine “the bottom line.” In our program, we “think of profit generation and return on investment as fundamental, as critical, as necessary, but not as the end of the operation.  It’s what you need to do in order to attract the capital from shareholders that will enable the business to do what it should be doing, which is to serve…”[2]

We don’t have this worked out perfectly and readily admit that these ideas need empirical testing.  But given the current environment, we feel less alone these days than we did just a few short years ago.  One interesting development in reforming business education has been a grass-roots campaign to install a Hippocratic-like oath—an integral component of medical education—to the field of management.  An oath for aspiring business leaders (see www.mbaoath.org) has gained momentum across the United States.  This past year, 400 graduating students took the oath at Harvard Business School.  And other programs, like Thunderbird, a highly-ranked global school of management in Arizona, have taken similar measures.

The campaign for an MBA oath dates back to 2004, when Ángel Cabrera, president of Thunderbird… suggested that his students write one.  It soon became an official part of the school’s MBA program.  The oath, Mr. Cabrera says, has been “a phenomenal change-management tool.”  Students constantly use it to question things they are taught, he says, citing those who took a faculty member to task for breezily asserting that paying bribes is a normal part of doing business in India.”[3]

These initiatives are important and should be applauded.  Business students must recognize, like doctors and lawyers, that they are part of a profession with shared values and aspirations.  And their actions in the marketplace should be held to such ideals.  But these efforts are just the beginning.  We need to rethink the entire business school experience, finding ways to define the moral imperative of business education.

One place to start is to find ways to counterbalance a long-term trend in management education that largely defines successful business training as scientifically rigorous.  The shift, which took place in the 1950s in response to a negative report from the Ford and Carnegie Foundations, was intended to strengthen lackluster faculty performance and narrowly-focused, vocational-oriented education.[4]  But, as often is the case, the pendulum may have swung too far in this direction.  Aspiring business leaders are often trained as compartmentalized clinicians rather than whole persons who assess both the analytical and social implications of business decisions.  In the pursuit of rigor, a corresponding and unintended depersonalization process has occurred.  A student’s ability to hedge currency risk may have greater value than engaging in honest conversation about doing the right thing.

An approach that might contribute to reversing this trend and that has had some success at MBA programs around the country is the use of literature to teach business ethics.  Harvard Business School has taken a leadership role in this process.  As Sandra Sucher, a senior lecturer at HBS explains, “through the novels, plays, short stories, and historical accounts, students are brought much closer to life as it is really lived, certainly closer than in lecture learning and even closer than in case discussion.”[5]  Through literature, students are forced to live less as clinicians and more as whole persons, seeing in characters of fiction and figures of history all the strengths, weaknesses, and fatal flaws that make us vulnerable in a world of moral complexity.

This is just the beginning of a wave of change that is taking place in business education.  Business deans and faculties are searching for ways to enrich the moral education that is offered in MBA programs. Creating a Manager’s oath is a promising start, as are efforts to broaden the ways we train business leaders.  The use of literature is an intriguing idea that has a track record of success.  The “new normal” of business has not yet been codified, but one thing seems to be certain— the purpose of business as defined by Friedman appears to be changing.  Maximization of shareholder wealth alone doesn’t feel compelling in this day and age, and it certainly doesn’t capture the imagination of market participants.  With all due respect to fiduciary responsibility to company shareholders, we need something grander, more compelling, and more sustainable.  It is time for practitioners and academics, alike, to work together to create and live out such a framework.

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[1] Brooks, Anthony (2009, May 17).  Business Schools Mull over Blame in Financial Crisis.  National Public Radio. Retrieved from http://www.npr.org/templates/story/story.php?storyId=103719186

[2] Scott, Alwyn (2009, May 29).  Questions for Jeff Van Duzer. Puget Sound Business Journal Online.  Retrieved from http://seattle.bizjournals.com/seattle/stories/2009/06/01/story10.html

[3] (2009, June 4).  A Hippocratic Oath for Managers: Forswearing Greed.  Economist.com.  Retrieved from http://www.economist.com/businessfinance/displaystory.cfm?story_id=13788418

[4] Holland, Kelly (2009, March 15).  Is It Time to Retrain Business Schools?  New York Time Online.  Retrieved from http://www.nytimes.com/2009/03/15/business/15school.html

[5]Gilbert, Sarah Jane (2007, November 19).  Teaching the Moral Leader.  Working Knowledge.  Retrieved from http://hbswk.hbs.edu/item/5801.html

What Do European Stamps and Secret Stock Trading Strategies Have in Common?

Carlo Ponzi

Everyone has heard about Bernie Madoff, the former President of the NASDAQ stock exchange who swindled $50 billion from would-be investors.  The scope of the fraud was new, but the format was not.  Madoff’s ponzi ran out of gas as the global financial crisis deepened and the onslaught of redemption requests intensified.

Ponzi schemes, which promise high profits from fictitious sources, have been around since the 17th Century.  They spring up all over the world, and vary in scale.  In the 1990s, for example, two-thirds of the population of Albania poured $1.2 billion into Ponzi schemes, some of which were endorsed by top government leaders. (See Wikipedia or The Week, January 30, 2009, for interesting historical details)

The scam’s name comes from Carlo Ponzi (photo above), who immigrated to Boston from Italy in the early 20th Century and promised to double investors’ money in 90 days.  More about him later…

Here is how Ponzis work: The operator of the scheme sits at the top of a “pyramid” by bringing in a small number of early investors.  High dividends are paid to this first wave of investors from funds invested from the next round of investors, and so forth and so on.  The operator either milks money from the the start or waits until the “house of cards” is about to fall to extract his fortune and get out of dodge.  What all Ponzi schemes have in common, according to Carlos Ponzi biographer, Michael Zuckoff, is “a three-step playbook: splash, cash, and dash.”

Carlo Ponzi, who’s name is forever linked to this form of fraud, told American investors he could double their money in three months by buying and selling European postage stamps.  He was so successful in netting cash, that at one point he was able to raise $1 million in investments in just three hours.  (In the early 1900s, this was a boatload of money)  Unsurprisingly, Ponzi’s $15 million fraud came crashing down after only nine months.  It turned out he had only purchased $30 worth of stamps.

Why do such schemes seem to play out again and again?  Greed is part of the answer, but does not account for it all.  Most successful Ponzi schemes play on networks, peer pressure, and a sense of entitlement and being on the inside.  John Bennett (Foundation for New Era Philanthropy) in the mid-1990s touted his faith credentials to lure some of the most respected Christian organizations in the world into his investment scheme before his “house of cards” collapsed.  Bernie Madoff pursued a similar strategy, netting investors from his religious community, wealthy Jewish philanthropists with whom he socialized at his Palm Beach country club.

Given this short history lesson, what can we learn?

• If something sounds too good to be true (except God’s grace and mercy), it probably is;
• If assets are not held by an independent, third-party custodian who can verify their existence, “run for the hills,” and call the SEC while doing so.
• Honesty rewards; dishonesty bankrupts.  It isn’t always so immediately but is always true in the long term.  As Proverbs 21:5-6 reminds us,

“The plans of the diligent lead to profit as surely as haste leads to poverty.  A fortune made by a lying tongue is a fleeting vapor and deadly snare.” 

Terrill/Dec. 2008 InterVarsity Update

intervarsity-terrill-final-december-2008-update

Pike Street Market (Seattle)

Friends: I hope you experiencing the fullness of God’s grace during this advent season. I’ve attached my final InterVarsity Ministry update (ten great years of work with InterVarsity coming to an end) as I fully transition to Seattle Pacific University.  God’s grace and peace to you all ~ John

One Sango Word for ‘Work’, Two Different Meanings

Vendors in Bangui, CAR, closing shop.

For the past three summers, I have led teams of graduate students, faculty and professionals to the Central African Republic (CAR), a country of four million people in the heart of Africa.  The CAR is largely a forgotten place, where internal turmoil (eleven mutinies and/or attempted coups in the last decade), instability and war outside its immediate borders, and a relatively small population have done little to attract international aid and economic support.  The United Nations has recently called the CAR the “world’s greatest silent crisis.”  And the International Crisis Group, a Brussels-based lobby, says the nation has dropped below the level of a failed state.

In response to the crisis in the CAR, we in InterVarsity’s Graduate & Faculty Ministries and Seattle Pacific University, have felt compelled to help.  Our work first started in 2006, when we joined with an American NGO, International Community Development International(ICDI), to help start a viable micro-finance program.  With deepening relationships and a series of return visits, this past June we broadened the scope of our work to include partnership with The Center International for the Development of Ethical Leadership (CIDEL), a Central African organization committed to training and encouraging ethical leaders at all levels of government, business and education.

 

As part of our June visit, we taught a variety of seminars on topics such as business ethics, micro-enterprise development, and the integration of Christian faith and daily work.  There was a great deal of interest in the first two topics, as you might imagine, but perhaps the warmest reception we received was in response to our teaching on concepts of ministry in daily life.  Pastors, lay people, and leaders in business, government and education listened attentively and enthusiastically to teachings on a biblical understanding of work.  The Central Africans were deeply touched and empowered by the simple, yet profound truth that God cares deeply about the routine rhythms of our daily lives, especially the concept that our work — whether cutting grass ten hours per day with a machete, teaching in a secondary school, or governing in a cabinet-level position — could be a meaningful expression of what it means to live as a Christ follower in the world.

In the course of our seminars, we learned an important Sango (primary language of the CAR) word, kwa.  When said in a low tone, kwa means work.  The same word, kwa, spoken in a high tone, though, means corpse, cadaver, carcass.

The impact of the etymology had profound implications for us, not only in aiding our teaching in the CAR, but for strengthening our own view of work and vocation back home.  When we understand our daily work as an opportunity to serve God and serve others, our perspective changes.  When we see our place in the world as sacred, even the most mundane tasks and moments in life can swell with meaning.  Work is undoubtedly challenging, but it is also a lively expression of who we are, who we are becoming in Christ, and how we are united with God in mirroring his character and joining with him in contributing to the well being of others.  When we fail to incorporate this perspective, daily life and work, even the best of personal and professional roles and responsibilities, can feel like death.  And instead of presenting a sweet fragrance to a hurting and needy world, we offer decay and stench.  Like the word kwa, our activity in the world can go in two very different directions.  We can understand our work as vocation, a calling from God for his purposes.  Or we can take the perspective that work is merely a struggle, something to endure.

I recognize that not all work is created equal.  And we all don’t have equal opportunities to engage in meaningful labor.  For some, work can even be demeaning.  In those situations an external change may be necessary.  But for most of us, it is our perspective that needs to change.  When we see the possibilities that our work presents as service to God and service to others, our sight lifts and our experience changes.  We move from death to life, and the world desperately needs more light.

Is “Being Green” Always So Clean?

I’ve become increasingly concerned about the well being of our planet.  I wish I could say I’ve been a long-term champion of environmental stewardship, but in reality I am a recent convert.  My own journey of earth care coincides with my deepening faith journey, as well as the pinch I feel in my pocketbook every time I pull into my neighborhood fuel station.

A couple of months ago I read a fascinating article in WIRED Magazine (June 2008), entitled Screw Organic.  The graphics and the title caught my attention.  In this piece, the authors offer ten counter-intuitive illustrations of how best to cut carbon dioxide and other greenhouse gasses.  In their own words, “The war on greenhouse gasses is too important to be left to the environmentalists.”  Here are several of their conclusions:

• Live in Cities: Urban living is gentler on the planet.  “A Manhattanite’s carbon footprint is 30% smaller than the average American’s.”
• Organics Are Not the Answer: “A single organically raised cow puts out 16 percent more greenhouse gasses than its counterpart.”
• Farm the Forests: “Over its lifetime, a tree shifts from being a vacuum cleaner for atmospheric carbon to an emitter.”
• Carbon Trading Doesn’t Work: Despite all the attention, the Kyoto carbon reduction projects will only slow the increase in greenhouse gasses by 6.5 days by 2012.
• And my personal favorite, Used Cars, Not Hybrids: “Pound for pound, making a Prius contributes more carbon to the atmosphere than making a Hummer, largely because of the nickel in the hybrid’s battery.”

This last one hit close to home, when just a few days ago my aunt called to ask me advice on whether or not she should buy a new hybrid Toyota Highlander.  The non-hybrid Highlander gets 18 mpg in the city and 24 on the highway.  The hybrid gets 27 city and 25 highway, only a slight advantage over the non-hybrid, yet it demands a long waiting period and a $10K premium.  Since at least half her miles are driven on the highway, I told her that if she remains sold on this manufactuer and make it was a “no brainer” from my perspective .  Given her years of projected ownership, she’d be a better environmental steward and save some money to boot by going with the non-hybrid.  From my back of the envelope calculations, she’d be more green by doing the non-green thing.  As we continued to talk, I pulled out the above-referenced article and began to quote some of the author’s claims.

“If the new Prius were placed head-to-head with a used car, would the Prius win?  Don’t bet on it.  Making a Prius consumes 113 million Btus, according to sustainability engineer Pablo Päster.  A single gallon of gas costs about 113,000 Btus, so Toyota’s green wonder guzzles the equivalent of 1,000 gallons before it clocks its first mile.  A used car, on the other hand, starts with a significant advantage: the first owner has already paid off its carbon debt.  Buy a decade-old Toyota Tercel, which gets a respectable 35 mpg, and the Prius will have to drive 100,000 miles to catch up.”

I am a novice when it comes to really understanding these important tradeoffs, but as a person trained in business and a Christian concerned with the flourishing of our planet and the well-being of others, I am determined to pay attention.  One place where this conversation will take place in earnest is InterVarsity’s Following Christ 2008 Conference.  The theme of the Conference is human flourishing, which certainly includes the care for creation on which human well-being closely depends.  One of the interdisciplinary tracks at the Conference will be God’s Green Kingdom, directed by Resource Economist, Dr. Lowell “Rusty” Pritchard.  The track will challenge Christians to think holistically and biblically about issues of globalization, architecture, zoology, conservation, climate change, and everything in between.  It will be a mix of teaching and discussion with field reports from people working at the growing edge of creation care, environmentalism, and sustainability.  I don’t know if they’ll talk about the advantages and disadvantages of hybrids, but I do know that they’ll provide important frameworks and case studies to make wise and faithful choices for God’s creation.

I want to be a better environmental steward, making choices that are guided by what is actually best, not just what conventional wisdom suggests.  I commend the Evangelical Environmental Network and Creation Care Magazine to you, as well as the God’s Green Kingdom track at Following Christ 2008.  Care of Creation is another great organization and resource.  They’re three good places to get started on the path of understanding.

Professional Schools Ministries 2007-08 Annual Review

Dear Friends: I’ve attached an annual review (summary) for Professional Schools Ministries for the academic year, 2007-08.  Thanks for your ongoing partnership in this work. I am deeply grateful. <professional-schools-ministries-2007-08-annual-review>

Work is…

In the past couple of days I have come across two reflections that have made me reflect more deeply on the meaning and significance of work.  In this post, I’d simply like to draw your attention to these resources and challenge you to jot down some of your own thoughts and ideas as you go about your daily work.  I’ve been trying to follow my own advice, and the impact has been helpful, especially as I make a transition to a new work assignment and city of residence.

The first piece comes from a former InterVarsity colleague, Pete Hammond, who has been instrumental in shaping the modern “ministry in daily life” movement.  A couple of years back he wrote a short reflection entitled “Jobs are…”, which is instructive on how we ought to think about our work as Christ followers, joys and toil, alike.  Here’s what Pete had to say:

“Jobs are… gifts from God… callings to honor God by serving co-workers, customers, suppliers.

Sacred opportunities and places for God to receive worship-filled work… invitations to use resources for the benefit of God and others.

Membership in a community of peers whom we can serve.  Chances to develop skills and gifts given to each of us by God.

Fraught with pain, sweaty toil and frustration since the Fall…

Not identical with our identity.  Much more than just a way to get a paycheck.  Not a long dark tunnel between leisure weekends.

Opportunities for delivering salt, light and leaven into broken places and troubled people.”

-Pete Hammond in Lessons, Prayers and Scripture on the Faith Journey(InterVarsity Ministry in Daily Life, 2007)

The second piece, by Peter Menzies, a national commissioner with the Canadian Radio-television and Telecommunications Commission, is entitled 50 Things I Love about Business.  It appears in Comment Magazine, June 2008 (print edition), and the November 16, 2007, online edition.  I’ll let you find your way there via the link.  It is worth the trip, as Peter’s insights are very helpful, capturing both the exhilaration and pain we encouter as we pursue our work and callings as image bearers of God in a fallen, yet “being redeemed” world.

Starbucks: Sacred Space?

Despite their July 1st announcement that they’re closing 600 stores in the United States, Starbucks remains a massive international operation.  With approximately 15,000 outlets worldwide, many patrons across the globe have sipped (or guzzled) one of their beverages.  I have been in Starbucks establishments in the USA, Europe, and Southest Asia, and in each setting I have found a high level of service, quality and ambiance, as well as a consistently expensive menu for anything but a basic cup of coffee.  But that is a different topic for another day.

Whether or not you enjoy their beverages, one of the things that strikes me about the Starbucks experience is that it engages all the senses.  Think about it for a minute.  As soon as you walk in the door, the aroma of freshly ground coffee (and so-so muffins and scones) penetrates your nose, working up an energetic salivary response.  Soothing, eclectic, somewhat edgy music, dancing over the hum of the espresso machines and coffee grinder,  glides into your ears.  And eyes embrace a warm, inviting color palette and interior that beckons you to “take a load off” and stay for a long while.  Even the textures of the fabrics, countertops, tables, and walls are interesting, inviting your fingers to linger a bit longer than normal.

The environment is pleasing, inviting, conducive to community, sharing, and connection.  Sadly, this is not always the case in our churches, where beauty, a warm handshake, and ”sacred” space for reflection and sacrament are often extracted from the worship experience.  There are many reasons why this is so, some of which are utilitarian.  Many churches, often rightly concerned with making every dollar count, skimp or neglect aesthetics altogether.

The consequences are often perilous.  Instead of creating an atmosphere that feels safe and inviting, many churches create an environment that feels sterile, institutional, hurried, and shallow.  Friendship suffers, the imagination suffers, and hope suffers.

We who lead in the church could take helpful queues from our observances of the sacraments, which, when rightly administered serve as bold reminders of the importance of the physical and material in experiencing the fullness of the grace of God.  Aesthetics do matter!  Our senses are intended to be sensed.  Gerald L. Sittser in Water from a Deep Well, a wonderful book on the history of Christian spirituality, agrees.

“The tangible, concrete, material nature of the sacraments reminds us of the reality of Christ’s saving work.  The sacraments join material and spiritual together into a seamless whole, just as the incarnation does.  They are window that allow us to gaze into another world and receive the grace that pours from that world into ours.”

Our churches might not look like the Starbucks down the street, but they should be equally interesting, inviting, hospitable.  They ought to engage the senses, ignite the imagination, affirm beauty, and allow personal space for reflection and change.  A commitment to create “sacred space” need not be expensive and wasteful.  Sometimes the simplest expressions, such as children’s art or handwritten banners by congregants describing the attributes of God (done by my church in recent days), can be powerful reminders of God’s boundless love, grace, and mercy.  Our churches have so much to offer, which is why they ought to be at least as inviting and imaginative as the Starbucks or other local coffee house around the corner.