Vanderbilt MBA graduates are helping lead Rover on a path of quick growth, but it’s not always easy to keep up
When you walk into Rover’s office in Seattle’s Belltown neighborhood, the first friendly face to greet you belongs to Dublin. She’s a 6-year-old Chiweenie (part Chihuahua, part Dachshund), whose owner smiles from behind the reception desk in the lobby. It’s a nice welcome to one of the hottest companies in tech.
Rover, whose business involves matching dog sitters, walkers and caregivers with dog owners, might seem a little canine-crazy to outsiders; a lap around the office reveals about a dozen dogs of various breeds displaying various levels of enthusiasm for office life. Yet, the office is quieter than you’d think it would be for a space filled with dogs. There’s little barking or roughhousing. For the most part, dogs lie on pillows near their owners’ workspaces. The humans, for their part, are focused on computer screens, perfecting Rover’s code or resolving issues between sitters and owners.
Rover has pioneered the on-demand dog sitting business, and propelling the company forward are graduates from the Vanderbilt University Owen Graduate School of Management. Led by Brent Turner, MBA’99, Rover’s chief operating officer, Owen alumni are shaping Rover’s culture on the fly as the company grows at breakneck speeds.
Rover works like this: Dog owners set up a profile for themselves and their pet on either the Rover website or the mobile app. When they need someone to watch or walk their pooch, they search for available sitters in their area who can either drop in for a quick visit, take the dog for a walk, or watch the pet overnight in either the owner’s house or at the sitter’s house. Sitters can send updates to the owners throughout the stay, including text messages and pictures, or report any incidents to Rover’s support team. After the stay, sitters and owners give each other starred ratings and can provide further feedback.
Anyone can sign up to be a sitter or dog walker for Rover, but Rover requires background checks, screens potential candidates for red flags, and spends a lot of time educating sitters on how to be successful while pet-sitting. Sitters set their prices, preferences and availability. Anyone familiar with online dating services will quickly recognize Rover’s user interface; it’s a matchmaking service, but for dogs and caregivers.
Since its founding in 2011, Rover has become the largest marketplace in the U.S. for pet-sitting services, with over 65,000 registered sitters. It has raised $90 million in total venture funding after closing an investment round in October that was co-led by Foundry Group and Menlo Ventures, whose other investments include Uber, Siri and Roku.
Rover has also been shaped by Vanderbilt grads, with Turner leading the way as COO. His job is to make sure Rover pursues its annual plan. On any given day, he attends to the business rhythms of Rover, checking in on the company’s teams, which include sitter success, marketing and operations among others. The Rover annual plan is broken down into a set of key performance metrics that departments and individuals are trying to hit. Turner can quickly see who is ahead and who needs help. He then turns his attention to pursuing his own projects in support of people on his team or his boss, Rover’s CEO.
Rover is a five-year-old company, and Turner has been COO for the last three, during which time Rover has made a name for itself on the tech scene. The company has experienced greater than or equal to 200 percent growth in revenue every year that Turner has been COO. “It’s the first legitimately hypergrowth business that I’ve been a part of,” Turner says. “With past businesses, my role had been to get everyone aligned in the right direction to push the company uphill. At Rover, it’s more like holding on for dear life and trying not to let anything come apart.” He’s focused on looking at the demands of Rover’s steep growth curve and identifying potential hurdles.
“Between March 1 and the end of July in 2016, our business doubled,” Turner says. “When you’re looking up at the start of March and you say our company will be twice the size in terms in terms of revenues at end of July, you have to start thinking about what we need to work on now to meet those scale challenges.”
At the moment, Turner is focused specifically on the marketing challenges facing the company. For example, most tech companies rely on the power of search engines to drive customers to their platforms. The problem for Rover is that not many people actually search the internet for dog sitters; they’re more likely to call a friend, neighbor or nearby kennel. So, instead of search engine advertising, Rover relies on mid-funnel or up-funnel channels, such as their blog, Facebook videos, TV and other local ads. That leads to many channels, so Turner is trying to tackle the complexity of this kind of marketing approach as the company grows.
“You hear a lot of people talk about not boiling the ocean, meaning you can’t work on all of your problems at once,” Turner says. “But when you’re growing so fast and all your known problems are going from immaterial to material so fast, and in the meantime unknown problems are coming out of the woodwork, you have to boil the ocean.”
The first person Turner hired to help him chart Rover’s course and define its values was fellow Vanderbilt grad Megan Teepe, MBA’11. Today she’s Rover’s vice president of sitter success and safety, charged with building out Rover’s junior and midlevel leaders. That means helping them develop the skills that will help Rover scale up by staying focused on performance and outcomes—and helping these leaders maintain their humanity at the same time.
At Rover, Teepe tries to identify with a strong set of soft skills that are harder to measure on paper. She’s looking for aptitude. “One of the most important things I’ve learned is how important it is to get the right people in the right roles from the beginning, and to learn your lessons quickly if you didn’t,” Teepe says.
“At Rover, if I’m hiring you for a leadership role where you’re going to be managing people, I want to know if you live and breathe leadership,” Teepe says. “I see that in the way you talk about why you want to lead people. Can you articulate that or is it just something you think you need to do to build your career? I’m eagle-eyed about that.”
And more Vanderbilt MBA talent may be on the way to help Rover grow.
This past summer, Sarah Eaton, MBA Class of 2017 and Owen’s student government president, interned at Rover, helping shape the educational aspects of the company’s sitter success program. She was charged with developing videos for social media that help explain to sitters what to do in in potentially sticky situations that arise during dog sitting. Hiring the right people is so important at fast-growing Rover that the company has painted its core values on a wall in the office. One of Turner’s most important values is a ban on personal agendas in the workplace. Pathological honesty and bias toward action are others.
“Errors of inaction are always unacceptable,” Turner says. “If you’re trying to solve a problem and you make a mistake, that’s OK, but don’t be intimidated by failure. If you don’t screw up something every month, I’m going to wonder if you’re trying hard enough.”
These values are especially important to Turner in his role as COO. He’s talked about them during a recent Taco Tuesday series held at Rover where a different employee presents to the team on a topic of their choosing. His main responsibility, after all, is to keep Rover plowing ahead without losing the characteristics that helped the company achieve success in the first place.
“Defining and living our values is important to me because Job No. 1 is to get the right people in the right roles,” Turner says. “We’re doing that here at Rover.”
In the next five years, Turner thinks $1 billion in revenue across the platform is realistic, along with a multinational presence and a rollout of other services. “When I got here almost three years ago, the idea that Rover would have revenue of $200 million across the platform seemed like it would be so amazing,” Turner says. “Now, we’ll roll right through that, and who knows where the top is?”
Catalina Lizarralde—“Cata” to her friends—seems to operate at the accelerated pace of time-lapse photography. Or at least that’s how it can appear to those who, like Dean Eric Johnson, describe her as a powerhouse of energy and innovation.
Give her just a little time, and Lizarralde, a second-year MBA student, gets a lot done. A native of Colombia who grew up in Ecuador, Lizarralde spent a year in Austria after high school studying music and honing her Deutsch. While there, she found time to volunteer at the 2006 World Cup in Germany. “Who could know when another such opportunity might arise?” she decided.
The next year, without fully mastering English, Lizarralde was in Columbus, Ohio, pursuing a bachelor’s degree. Amid a difficult job market following the financial crash in 2008, she reasoned, “I thought if I graduated faster it would show employers I could work at a high level.” She graduated from Ohio State with a double major in just three years.
She was right. After graduation, Lizarralde went straight to New York, where she’d landed a job as a strategy and operations consultant with Deloitte. Working with clients around the United States and internationally, she says, “I learned that companies can be very different across industries and regions, but what drives their success is the caliber of their leaders.”
Two new chief executives
She arrived at Vanderbilt in August 2013. Opting to pursue an MBA because she believes it is the best way to grow as a business leader, it’s not surprising that Lizarralde was elected to the Owen Student Government Association three weeks after arriving on campus—or that she is serving this year as OSGA’s president.
Owen’s other new female chief executive—Erika Bogar King, MBA’99—took a more deliberate approach, both to her career and to her newly assumed leadership of the Owen Alumni Board.
For one thing, she says, she waited a little longer than most of her classmates (she was in her late 20s) to seek an MBA. For another, she didn’t immerse herself into activities. “I wasn’t hyperinvolved as a student,” says King, who serves as senior vice president of human resources for Avanade, a technology professional services firm established as a joint venture between Microsoft and Accenture.
In fact, though she met her future husband, Rogers King, MBA’99, at Owen—they had classes together during the first two mods—King even took a deliberate approach to their relationship. “We didn’t start dating until much later in the year,” she says, recalling the academic demands of that first fall.
It was as a student that she realized what a gift alumni give when they come back to campus. She saw, she says, how valuable it was to “have alumni with real-life experience coming in and talking about what they’ve done in the real world.”
King concentrated her MBA in human resources and organization management and joined Deloitte after graduation. In her two decades with the global giant, she moved from Deloitte Consulting’s Human Capital practice to leading Performance Management, where she focused on best practices, standards and tools, performance programs and effectiveness measures for all Deloitte U.S. firms.
Shaped by personal experience
Though Lizarralde and King took divergent paths, their respective presidencies illustrate something quintessentially Owen: They are drawing on their own perspectives, styles and experiences to help shape how students and alumni interact with the school.
Lizarralde’s international background, for example, has given her a wide-angle lens to view opportunities for new OSGA initiatives. During her year in Austria, and even more as an undergrad in the Midwest, Lizarralde grappled with what she calls the cultural adjustment. But she also gained an acute appreciation for the advantages of working with diverse types of people.
That shaping experience, in turn, gave Lizarralde a clearer sense of what she might contribute as a leader. “Even though we have an international community here,” she says, “it’s not that large because the school itself is small. I felt like I could add value because a lot of students hadn’t been exposed to other cultures. And I wanted international students to understand you can really make a difference here.”
Under Lizarralde’s leadership, Johnson says, “OSGA has already launched several initiatives to build the Owen community and expand our global perspective.” And that was before the new academic year even began.
Connecting students
After being elected in March, Lizarralde and OSGA senators and committees explored ways to increase the interaction between students from differing years and backgrounds. One of their big ideas—an international immersion and trip for incoming students—was rapidly adopted, and implemented barely three months later.
“It was the first time we’d had something structured like this,” Lizarralde explains. “We worked with the dean, and we created trips to Costa Rica for July that would be led by faculty and staff. The trips would provide some bonding but also include a component on how international business is done.”
The OSGA team finished planning the details before the end of April, when Lizarralde left for New York and a summer internship with Diageo, the beverage company that owns such household names as Crown Royal and Guinness.
The internship didn’t interrupt Lizarralde’s work for OSGA. During the summer, she and her team worked with the Career Management Center to develop a timeline checklist to help incoming students better organize themselves. She and three members of OSGA’s international student committee also created a guidebook for international students. “When I came here, I didn’t know where to grocery shop, where to bank, where to get a driver’s license, or what I should avoid,” she explains. “We hope that having a guide like this can make the first-year experience easier.”
And as the first mod in the fall began, OSGA was busy implementing a new program to increase interaction between first- and second-year MBA students. “Our idea,” Lizarralde explains, “was to divide the community into pods of 20 people, and give each pod a budget to do something fun together during the semester. We think this will especially benefit people who are less outgoing as well as the international students.”
Giving back from day one
Just as Lizarralde’s ideas for OSGA were influenced by her international background, King’s perspective on the efforts of the Alumni Board were shaped by her own experience as a young alum. While giving back has always been important to her—she and her husband both serve on the board of a nonprofit organization that supports early learning and quality childcare—she found that, in the years after graduating from Vanderbilt, her contributions to the school involved gifts of time more than money.
Her postgraduation job in consulting enabled her to fly to Nashville from client sites easily. So at first, King maintained her connection with Owen by speaking to the consulting club, then at events for women in business, then as part of a series on leadership, then as an Alumni Board member. “In any area where I had subject knowledge, I’d go back and meet the students and share my thoughts,” she says. “To me, that’s one of the best ways our alumni can give back.”
Understandably, one particular interest for King as a new board president is engaging more young alumni more deeply into the life of the school. Perhaps looking back on her own experience as a newly minted Vanderbilt MBA, King says, “I think sometimes people think the only way you can participate is with your money, and that’s not true.
“A recent alum may not be in a position to give money or to make hiring decisions, but they can offer insight to students or help them get an internship. From there, they might be in a position later to come speak to a class,” she says. “We hope to engage people early, in small ways, and then see that engagement grow.”
The effort is part of a broader diversification strategy that the board is developing in consultation with the dean. Within the next several years, Owen will have more than 10,000 alumni, increasingly dispersed across the United States and around the world. “It calls for a little more formality around how we engage those alumni,” says King, whose own work routine—she travels frequently between her home in Atlanta and Microsoft’s Seattle headquarters—illustrates Vanderbilt’s geographic reach. “We’re not a regional school anymore. We don’t all know each other.”
Connecting alumni
One strategy the board is pursuing involves building on the successful City Owen events, which aim to increase opportunities for alumni to meet other Owen graduates in their market. “This year,” she says, “we’re looking at experimenting with events in smaller cities, like Chattanooga, and regional events.
“The Owen alumni office can’t do it all by themselves, so the onus is on the alumni board to recruit more people to get involved, and then ask each of these volunteers to bring five new people into the fold every year. If we set this up properly, it will sort of take off on its own,” she says.
In keeping with the evolution of the school’s student and alumni population, King and her colleagues are looking to tweak the composition of the board’s diversity in terms of age, race, gender, business area and location. “That has always been a goal,” she points out, “but we are being more intentional about it.”
For example, the alumni group has established a goal of filling eight of its 40 board slots with young alumni, including graduates of Vanderbilt’s one-year Master of Finance, Master of Accountancy and MAcc Valuation programs for young professionals.
Additionally, the board is exploring ways to involve international alumni in particular. “If we have 500 international alums, should we have formal representation for them on the board as a segment, given the time zone and geographical challenges?” King says. “How can we make it work?”
Dynamic leadership
One reason the Alumni Board and OSGA are both working well, according to Johnson, is the quality of leadership. “I am grateful to have this pair of dynamic women leading at Owen,” he says.
For their part, King and Lizarralde credit the strong teams of students and alumni working with them, and others in previous years who helped build a strong foundation. But perhaps, too, there’s a cultural factor at work at Owen that makes people want to be involved during and after their years in school.
“The administration lets us have a real voice,” Lizarralde says. “That’s why it’s easier to get things done here. There is a lot of trust and a lot of communication. Princeton Review named Vanderbilt as having the happiest students, and I think it’s true with Owen, too. It’s because we feel that connection with leadership.”
There are a few things all graduates from a top MBA program will pick up in the course of their studies, including accounting skills, a class or two on business strategy, and at least some instruction in leadership.
While accounting and strategy are pretty straightforward, leadership can be anything but. Great minds, stretching from Aristotle to Steve Jobs, have come up with a variety of different ways to define the essence of leadership. And there’s certainly no shortage of books on the topic, ranging from the truly inspirational to absolute junk.
So how does Vanderbilt set about teaching a topic that has so many different meanings for so many different people?
It comes down to three important pillars: A classroom curriculum designed to transform natural leadership instincts into systematic, smart decision making; a highly personalized leadership development program offering a Korn Ferry-based skills assessment followed by one-on-one executive coaching; and a small, supportive environment where student leaders have the opportunity to make a big impact.
Then there’s Owen’s size. The school is small enough to be able to “invest in students at an individual level,” says Eric Johnson, dean of the Owen School. But it’s also a top institution offering the kinds of opportunities available at its elite peers. “For example, we have many of the same clubs and student organizations that Wharton does,” Johnson says.
This multidimensional, hands-on approach to leadership offers students a robust platform from which they can continue to hone their leadership skills long after they’ve left school.
So how does Vanderbilt set about teaching a topic that has so many different meanings for so many different people?
In the classroom
All full-time MBA students start with the class Leading Teams and Organizations, a required course that is taught in the first mod each year.
And every year, Associate Professor Tim Vogus, who has taught the course for the past decade, braces for an onslaught of generalizations and vague leadership platitudes coming from students.
“One of my primary goals is to get students thinking in terms of specific decisions they’d make in tough situations,” Vogus says.
Among the cases and simulations the class examines is one that imagines students serving at the helm of Mission Control at NASA. The scenario says that after many hours carrying out grueling, mindless tasks ordered by commanders on the ground, a group of astronauts in midorbit demands to conduct a few scientific experiments of their own. If they’re denied, the astronauts say they’ll go on strike.
Vogus says responses to the astronauts’ demands vary—with one student going so far as threatening to cut off the ship’s oxygen supply—but at the very least he wants to force students to consider the crew’s perspective. “These astronauts are all highly trained scientists and they’re being given about as much autonomy as a fry cook at McDonalds,” he explains. “What makes their work meaningful? How do we keep them motivated? They just want to be treated as individuals with autonomy, not robots.”
While there is no correct answer for how to handle this simulated strike in space, Vogus says the goal is for students to understand how to transform their gut reactions into thoughtful decisions executed in a systematic way. This involves developing not only a sense of self-awareness about how a person reacts in certain situations, but also understanding how a decision’s consequences ripple far beyond one’s immediate field of vision.
Vogus also tries to get students to think about leadership as something beyond the traditional notion of a Jack Welch-styled executive barking out orders from behind a wood-paneled desk. “Leadership comes in many different forms,” Vogus says. “It’s not just about where you are on the corporate ladder.”
Leading is learning … and vice versa
For Associate Professor Ranga Ramanujam, leading is inseparable from learning. This is the primary message in his popular leadership course, Organizational Learning and Effectiveness, developed in 2011 after years of teaching Leading Teams and Organizations.
“How do you intentionally and continuously learn to be a better leader? You learn from experience, from others, from experiments and from failure. It’s ultimately not an academic exercise,” Ramanujam says. Nevertheless, he says, there are three key areas that a person must continuously learn to manage to become an effective leader:
Yourself—How do your actions help achieve results?
Information—What data can you harness to make better decisions?
People—How do you influence others in a way that gets the job done?
“This is management in the true sense of the word,” Ramanujam says. “I tell MBA students not to shortchange the degree they’re getting by defining themselves narrowly in terms of a function. First and foremost, you are a manager, no matter what area you specialize in. Being a manager is a multifaceted and complex role.”
Even seemingly trite tasks such as forming teams and splitting work assignments can offer opportunities to learn about effective management, Ramanujam says. In class, he instructs students to group themselves into two sets of non-overlapping teams and then observes how they select team members. Students typically group themselves with others in their same areas of concentration or with whom they have worked previously, forgoing opportunities to expand their networks. “At one point, I developed a map of the class to show the students what was happening,” Ramanujam says, pointing out that it was also an example of how he tries to find actionable data in everyday situations.
He is surprised, too, by the tendency of students to divide project work among team members in equal portions out of a sense of fairness without also considering what will produce the best final outcome.
“What makes an effective leader is defined by what you pay attention to,” Ramanujam says. “There are so many things that affect an organization. So how you allocate your attention makes a significant difference because you can’t pay attention to everything.”
Leader, know thyself
If leading does come down to learning, Owen students have ample opportunity to delve deep into their own leadership strengths and weaknesses through the school’s highly rated Leadership Development program.
Over the years, the program has added strategic partnerships with global talent management firm Korn Ferry and Hogan Assessments. MBA students begin by taking Hogan LEAD Assessments, a diagnostic tool used by a majority of Fortune 500 companies. It offers students a detailed roadmap of their working styles and points out unique capabilities, as well as challenges and areas for potential development. “We believe that self-awareness is the key to long-term leader success,” says Melinda Allen, executive director of LDP. “That’s why the assessment serves as an instrumental starting point.”
Students can tailor their LDP experience from a range of different approaches. The program includes an individual approach, which provides students with four one-on-one sessions with a vetted executive coach as well as a full 360-degree assessment. A shared approach that includes group coaching sessions and assessment tools is available for students who prefer working in groups. Alternatively, students can pick a flex option that provides two one-on-one coaching sessions at the timing of their choice in the first year. Students can also simply choose programming on an a la carte basis to best suit their needs. Nearly 80 percent of the most recent class of first-year MBAs participated in one of these approaches.
“For me, LDP defined the term ‘self-aware’ in a whole new way. We are all self-aware—I thought. How much could there be about myself that I don’t know already?” says Fazulul Haque Sheik, MBA’14. “But a few sessions into the program I realized that I knew very little about myself. LDP helped me identify my shortcomings, built a structure to help me overcome challenges, and most important, taught me the skills to replicate this structure anytime, anywhere to sustain the learning process.”
Allen says the program offers the type of personalized, in-depth leadership training normally reserved for rising corporate executives who have been identified as having high leadership potential. “Our students come out of school having completed the same program many people wait years to have access to,” she says.
Vogus says LDP adds a complementary layer to what he and others are teaching in the classroom. “In both LDP and in the classroom, we are able to meet the students where they are in terms of developing their leadership abilities,” he says.
Leadership as contact sport
As anyone at Owen—and elsewhere—is quick to point out, there’s only so much one can learn about leadership in the classroom or even an LDP program. Johnson likes to say that leadership is a contact sport, and that it’s Owen’s obligation to provide students with opportunities to lead in an environment that’s both safe and supportive.
“We want to figure out and expand ways to empower students to take ownership of things related to the school. We want to be there to support them, and if needed, to help pick up the pieces when things don’t go right,” Johnson says.
As a prime example, he points to the annual student-run Vanderbilt Health Care Conference, which has attracted top speakers and health care recruiters for the past eight years. While members of Owen’s staff, as well as faculty members like Larry Van Horn, executive director of health affairs at Owen, lent their support and contacts for the conference, it is ultimately the students that pull the event together.
“The two women who ran last year’s conference—Megan Eberhard and Kristen O’Neill—they absolutely owned that conference,” Johnson says. The dean says he sees similar examples all around Owen, from the roles taken on by student government and club leaders to those involved with service organizations like Project Pyramid and 100% Owen.
“Leadership, in the end, is about being able to positively influence and achieve objectives through other people,” Johnson says. “Many MBA students haven’t had that opportunity before coming to business school. Sure, we can teach about leadership—and we do that well—but we must also provide opportunities to get real experience.”
Leadership across Owen
Students in Vanderbilt’s full-time MBA program aren’t the only ones to benefit from the school’s Leadership Development Program. All degree-seeking students experience LDP programming in a manner relevant to their professional goals. Read on for executive program details —information for those just launching a career is here (lead and succeed)
Executive MBA
Vanderbilt’s MBA for Executives program takes a four-prong approach to honing an executive edge in leadership. This involves interactive leadership workshops; resources and support designed to help students learn from their cross-functional C-team group experience; leadership assessments and coaching sessions with experienced executive coaches; and support to help the students develop individualized leadership development plans.
Master of Management in Health Care
The Leadership Development Program is woven throughout the MMHC program. It includes both an executive coach, who helps students develop a personalized leadership development action plan, and a team coach who supports teams throughout their capstone projects when they manage real-world projects for health care organizations.
Recommended reading from Owen classes
Give and Take: Why Helping Others Drives Our Success
by Adam Grant
Lift: Becoming a Positive Force in Any Situation
by Ryan W. Quinn and Robert E. Quinn
When Dean Eric Johnson thinks about Vanderbilt Owen Graduate School of Management, pianos are not far from his mind. Not just any pianos, that is, but those made by Steinway & Sons—the 160-year-old brand played by 98 percent of the concert pianists around the globe.
Odd as the pairing seems, Johnson believes there is more of a similarity between the school and the world-renowned piano manufacturer than what their disparate business models would suggest.
“At Steinway, they’ll bring the very best lumber from all over the world. They’ll go through this very long process—it takes them two years actually, kind of like getting an MBA,” Johnson told a group of incoming students in June. “But their whole thing is this personal scale; they’re going to take that wood and they’re going to make the very best piano that they can.”
Johnson, who serves as the Ralph Owen Dean and the Bruce D. Henderson Professor of Strategy, left Dartmouth College’s Tuck School of Business to succeed Jim Bradford in July. He has written two case studies about Steinway in his research and points to the company’s “intense focus on detail and personalization” as the key to its longevity. He sees those traits as the key to Owen’s success as well.
Johnson taught at Owen from 1991 to 1999. “I chose to come back to Owen for some really specific reasons,” Johnson says. “Yes, I love Nashville. It’s a great city and a great place to live. But it’s really the excitement of being at a school like Owen, at this place and time, that brought me back. Part of that has to do with the size of Owen.
“At Owen, we still have the luxury of working at this personal scale, and it’s that scale where I think real transformation occurs—a breakthrough kind of scale.”
In short, Johnson expects big things from Owen’s small community. He believes the school’s close-knit culture can help students live up to their potential by encouraging more collaboration not only with each other but with alumni, faculty and staff as well.
Johnson says an Owen education should reflect each of these groups’ hard work and attention to detail, and in this regard the learning process at the school is a lot like what goes into making a Steinway. There are no shortcuts, and neither one can be mass-produced.
“At Owen, we still have the luxury of working at this personal scale, and it’s that scale where I think real transformation occurs—a breakthrough kind of scale.”—Dean Eric Johnson
And like a Steinway, an Owen education is attuned to something greater than the sum of its parts. A calling in business may not conjure the same feelings as a piano concerto, but it can be heady and inspiring in its own way—especially in the hands of someone like Eric Johnson.
Curious and interesting
Early on in his career, Johnson was an unlikely candidate to teach at a business school, much less be the dean of one. In fact, working in academia was the furthest thing from his mind when he was earning his Ph.D. in industrial engineering and engineering management at Stanford University in the late ’80s and early ’90s.
“I had no plans at all to go into academia,” he says. “And if I had, it probably would have been in engineering rather than business. If you look at my C.V., you’ll see I don’t have any degrees in business. Well, not quite—I have an undergraduate degree in economics—but all the others are in engineering.”
While finishing his Ph.D., Johnson worked for Hewlett-Packard in Palo Alto, Calif. He was part of a team developing an automated vehicle for health care that was designed to deliver drugs to patient rooms and navigate hospital hallways. “It used an HP calculator as its brain, if you can believe it,” Johnson says with a grin.
Johnson’s interests and abilities made him a natural for Silicon Valley, but his career took an abrupt turn in 1991. That was when he received an unexpected phone call from Gary Scudder, an operations professor at Owen.
“I had been introduced to Gary through a friend of a friend, and one day he called me out of the blue,” Johnson says. “He said, ‘Eric, have you ever thought about teaching at a business school? And would you consider coming to Nashville?’”
Johnson and his wife, Nancy, had thought about settling down in a more affordable part of the country, and Nashville presented an intriguing possibility. If anything, it was the unfamiliarity of the situation—with Nashville, with Vanderbilt, even with just being in a business school itself—that convinced him to consider the job.
“The whole thing was curious and interesting. So I decided to come for an interview,” he says. “After I spent a day here, I fell in love with the place. I thought it was a neat opportunity. At the time Owen felt a lot like a startup company to me. It was really young and vibrant.”
Passion for teaching and learning
Once Johnson accepted the job as assistant professor of operations management, he never gave a second thought to his decision to enter academia. “I found that I actually loved teaching. Being in business school was nothing that I’d really expected,” he says.
In particular, teaching operations to MBA students provided him with an exciting challenge.
“Most MBA students come to business school having no idea what operations is. They don’t have a lot of feelings about the subject, either good or bad,” he says. “But by the end of that core class, many are considering a career in an operating role. They see that operations is really the guts of executing business. It isn’t marketing it or accounting for it or financing it. It’s actually running a business.”
Johnson quickly became a widely admired professor, winning the Dean’s Teaching Excellence Award twice in eight years and becoming one of the youngest faculty members ever to receive tenure at Owen. “Eric was an excellent teacher and had a great rapport with the students. He is still in contact with many of the alums from that time period,” says Scudder, the James A. Speyer Professor of Production Management. “He also has one of the best laughs of anyone I know and enjoys life to its fullest.”
Anyone who has spent time with the dean knows the distinctive laugh Scudder is referring to. It is as infectious and genuine as Johnson’s own passion for learning.
“Other than his laugh, which I’m sure is well documented by everyone who knows him even a little bit, what I remember most about Eric is his passion for his subject,” says Paul Stanley, MBA’94, vice president for marketing at Mercury Intermedia. “For his simulation course, I would see him in the computer lab (where I worked) at odd hours testing new ways of simulation and ways to teach it. His examples, often gleaned from personal experience, always hit home and made the theoretical a practical tool for students.”
Former students also recall the importance that Johnson placed on experiential learning. For example, Emily Anderson, MBA’99, remembers a field trip to FedEx Corp. headquarters in Memphis, Tenn., that former FedEx vice president Mike Janes, MBA’84, helped coordinate.
“Eric wanted us to really experience operations,” says Anderson, who now serves as director of internal operations and coaching for Owen’s Career Management Center. “At FedEx in Memphis, we saw how the planes came in around midnight and how all the packages were sorted, moved and transferred in like a 3- or 4-hour window. It was amazing to watch.”
Janes, who today serves as CEO of FanSnap, adds, “I hosted Eric and his student groups several times at FedEx, and I was always impressed by his passion and ability to aggressively bridge the classroom and the outside world.”
Importance of vision and time
In 1999, then Associate Professor Johnson departed Owen for the Tuck School of Business in Hanover, N.H. It was by no means an easy decision. His two oldest children—Wesley, 20, and Hannah, 18—were born and raised in Nashville (his youngest, Nathan, is 13), and he had grown attached to the city, and Vanderbilt in particular.
“Eric was a trailblazer … He brought to campus the latest in technology through the center’s Tech@Tuck days, where the latest innovations were highlighted.”—Paul Danos, dean of the Tuck School
However, the opportunity at Tuck was too great to turn down, especially since the school was similar to Owen in many ways. “When I first went to Tuck, it was the same size as Owen is today,” he says, “and that was one of the things that attracted me there.”
During the 14 years that followed, Johnson continued to win respect not only as a teacher and researcher but as an administrator, too. In addition to being the Benjamin Ames Kimball Professor of the Sciences of Administration, he served as associate dean for Tuck’s MBA program and faculty director of the Glassmeyer/McNamee Center for Digital Strategies.
“Eric was a comprehensive contributor to the Tuck School in his superb teaching, his departmental leadership, his research and the many contributions his Center for Digital Strategies provided students, alumni and the corporate world,” says Paul Danos, dean of the Tuck School.
“Eric was a trailblazer,” Danos adds, “with activities such as the center’s roundtables for corporate leaders where chief information officers, their staffs and academics gathered around the world and engaged in dialogue about the challenges they all confront in today’s digital environment. He brought to campus the latest in technology through the center’s Tech@Tuck days, where the latest innovations were highlighted.”
In return, one of the things Johnson learned from working with Danos is the importance of having not only a long-term vision for a school but also the time and resources to implement it. Johnson attributes much of Tuck’s success to the fact that Danos has had 18 years at the helm to execute his strategy.
“Continuity in this kind of environment is particularly valuable,” Johnson says. “Many times people will look at business schools and think of them as a business—and they are in a way—but there are some very big differences. With business schools you’re really talking about a community, and communities and cultures don’t change quickly.”
That feeling of community
As Johnson embarks on his own tenure as dean, he is mindful of keeping Owen’s community central to the school’s mission. One example where he says it is already in effect is the young professional programs, like the master of accountancy and master of finance, which Jim Bradford and others helped build.
“Many times business schools can get distracted by creating so many different peripheral programs where the students don’t really interact at all,” he says. “Maybe the same faculty is servicing them, but the students themselves are not really enriched by each other’s presence.”
“What Owen has done so well with these young professional programs is that they’ve found a way to ensure not only that they’re successful for those groups but that those groups themselves add to the overall MBA experience by bringing really bright, talented folks into the community.”
Likewise, Johnson sees a similar role for the school’s research centers. “The thing we found successful at Tuck is this notion of a center that has a research core but is also a key part of the life of the school,” he says. “It’s about creating activity that’s not separate or independent but that really builds on the synergies of the school itself and brings ideas, innovation, curriculum and speakers back into the community.”
Even the Owen building itself plays a role in that sense of community. “One of the things I’ve always viewed as a huge asset is the very unusual architecture of the building that we’re in,” Johnson says. “I travel to other top business schools that have built large new buildings, but many of them are soulless—just long hallways and offices with doors that are shut. The openness of Owen’s building, on the other hand, focuses all of the activity into the lobby or the courtyard outside when the weather’s nice.”
“As we think about anything, whether it be growth in our physical structure or growth in faculty, staff and students, it’s something we will constantly be attentive to—how do we maintain that feeling of community?”
One answer to that question, Johnson says, is technology. Given his background, it should come as no surprise that digital learning is a key interest for him. It also happens to be one of the university-wide initiatives being promoted by Chancellor Nicholas S. Zeppos as Vanderbilt plans its future.
“What’s exciting about digital education for a school like Owen is not so much trying to change whom we target or how we interact with the world, though we can do that,” Johnson says. “It’s really more about enhancing the education that we offer right here in Nashville. Technology can enable us to transform the educational experience from something that’s historically static to one that’s much more dynamic, interactive and experiential.”
Johnson also sees digital technology as a tool for engaging the school’s most important audience—its alumni. “Owen students don’t often think about this when they come on the first day, but they become part of the Owen family at that moment, and it’s something they will carry the rest of their lives,” he says. “Technology enables us to take a lot of the neat things we’re thinking about and doing here and share them with alumni in ways we never could have before.”
“Those are areas we’re experimenting in—real breakthroughs.”
On our toes but looking forward
Asked how it feels to return to Owen after all these years, Johnson lets his daughter, Hannah, do the talking—or texting, as it were. After packing up their belongings this summer, he and the rest of the family piled into two cars and made the 1,200-mile trip from New Hampshire to Tennessee. As they neared Nashville’s city limits, he says Hannah texted an old family friend:
“Two words: We’re home.”
This sentiment—that Owen is as much a home as it is a school—is a common refrain among its community, and there is a shared feeling that Johnson will be an excellent steward of the culture.
“I still think the best feature of Owen is that it felt like it was my family, not just a school,” Paul Stanley says. “Eric has the ability to keep that intact while continuing to improve the academic, scholarly and job-performance reputation of Owen. If you know Eric’s family personally, you know beyond a shadow of a doubt that Owen is in good hands.”
Brent Turner, MBA’99, chair of the Owen Alumni Board, points to alumni relations as one area that can benefit from Johnson’s experience at Tuck. “Eric is a longtime friend of Owen, and he has spent several years at a school that has built fantastic relationships with its alumni,” says Turner, president at Code Fellows. “I look forward to applying the lessons that he learned to our community and family.”
Anderson, who is both an alumna and Owen staff member, is excited about Johnson’s hiring for several reasons. “From the standpoint of the Career Management Center, we’re very excited about Eric’s ties to the corporate world through his research, case studies and consulting, and we’re anxious to have him meet our recruiters,” she says. “I think he’ll help us make even more connections.”
Anderson also believes Johnson will push the school itself to think and grow alongside its students. “I think he’s going to have some new ideas and maybe challenge us about the way we do things and how we can share and cooperate,” she says. “He’ll keep us on our toes but also looking forward.”
It should come as no surprise that those who know Owen best frequently use words like “cooperate,” “community” and “family” in talking about the school and Johnson’s vision for it. These concepts are more than just buzzwords; they are a way of life at Owen, exemplifying the personal scale of business that Johnson described to incoming students over the summer.
This personal scale is a difference maker, Johnson argues, whether one is looking at business schools or, yes, even pianos. Ultimately it boils down to one question: How much care goes into this product?
“What Steinway figured out is that there’s a market, an important market, way up there at the top, where no two pianos are alike. But they’re the best pianos in the world,” Johnson told the students in June. “And pianists will sit down and play on two or three or four of them and they’ll find the one that they love and then they’ll keep that thing for the rest of their lives.”
In a way, Johnson could just as easily be talking about the connections that exist between Owen and the members of its community. As he himself can attest, the school never really loosens its hold on the people who value it most. Owen has a way of bringing its community close together even when time and distance intervene, and it is through these relationships—the ones operating at a personal scale—that great things are accomplished.
The man the crowd knows as Deacon from the popular television show Nashville takes the stage at the Grand Ole Opry to screams of recognition. He starts with a sensitive ballad, and women of all ages stream past the lip of the stage and take his photo before being urged by ushers to make way for the next in line. Charles Esten looks to be having the time of his life. Is he a country music star, an actor playing a country music star or something in between?
Who knows, and really, why would it matter? Everybody is having a good time. Esten segues into a drinking song. “Pour, pour, pour some more,” he sings, “just like the four you poured before.” The crowd eats it up.
Off to the side of the stage, a low-key, conservatively dressed man looks on. The man is Steve Buchanan, BS’80, MBA’85, president of Opry Entertainment and co-creator and executive producer of ABC’s nighttime TV drama, Nashville.
At Ryman Hospitality Properties, Buchanan is also a music business executive, a type represented on Nashville as the heartless and manipulative character Marshall Evans, head of fictional Edgehill Records. But Evans, Deacon, Rayna, Juliette and the rest of the television Nashville world exist only because of the vision of this real-life executive with a heart for the music and a business sensibility forged at Vanderbilt University and Owen Graduate School of Management.
Scientific Beginnings
Raised in Oak Ridge, Tenn., the son of a nuclear engineer and a chemist, Buchanan first enrolled in Vanderbilt as an undergraduate in the engineering school, intending to become an environmental engineer.
“I loved music and I very quickly got involved in the concert committee as a freshman,” Buchanan says. “In fact, that and the fact that engineering school was very challenging contributed to less than stellar academic performance for me.”
Buchanan and his cohorts brought many memorable shows to campus. Some of his favorites include Ray Charles, Bonnie Raitt, Muddy Waters, Pat Metheny, Lester Flatt, David Bromberg, George Thorogood and Karla Bonoff.
“We were freshman hallmates in 1975 at Vanderbilt and immediately became best friends,” remembers Ken Levitan, now an artist manager whose clients include Kings of Leon and Emmylou Harris. “We were both involved on the concert committee and Steve was unbelievably hardworking at everything he did.”
“Steve brought Bob Marley to town,” Levitan says, still sounding astounded decades later that the reggae legend played Vanderbilt. Buchanan shakes his head, calling the Marley concert “an amazing experience.”
Buchanan says a course with Vanderbilt’s legendary cultural sociologist Richard “Pete” Peterson led him to transfer to the College of Arts and Science and major in sociology and psychology.
But it was really his extracurricular activities promoting music shows that allowed Buchanan to discover his vocation. “It was enlightening for me because despite my complete love for music, I had never necessarily thought of it as being a business,” Buchanan says.
First Job on Music Row
Upon graduation, Buchanan rejected suggestions that he move to Atlanta or New York, where he was told he could probably find work at a promoter or record label. Instead, he placed his bets again on Nashville. Levitan had already graduated and gone to work at Buddy Lee Attractions, a booking agency on Music Row.
“I helped Steve get a job at Buddy Lee,” Levitan says. “At that time there were still a lot of independent booking agencies in Nashville and you could make a mark there.”
At Buddy Lee, Buchanan was in a position to meet music industry people in Nashville, New York and Los Angeles.
“Two of the agents I worked with had played with Hank Williams (Sr.),” he recalls. The two, Jerry Rivers and Don Helms, still worked weekends as the Drifting Cowboys. “So I was both learning the business and learning the history of the business.”
Still, Buchanan had a nagging feeling that there was too much he didn’t know. He questioned if he even wanted a career in the music industry.
Once Again, Vanderbilt is the Answer
“I made the decision to quit my job and go back to school full time because I wanted to do a specific concentration and immerse myself,” he says.
Buchanan entered the MBA program at the Owen Graduate School of Management, focusing on marketing and gaining a strong foundation in the fundamentals of management.
Like his undergraduate career, getting started was rough.
“It was a rocky start, because it’s very difficult to just disconnect yourself when you’re still in the same playground that you were in before,” he says. “You’re still in your mid-20s and you still like to go out and listen to music, and your friends are still around and you’re supposed to be totally bathed in academics. It finally kicked in second semester.”
At Owen, Buchanan learned to be disciplined in his approach to business. “It really made me focus,” he says. “I learned to be methodical and strategic about things.”
Coming out of Owen, Buchanan faced a crossroads between a managerial training program at Northern Telecom and becoming the first marketing manager in the history of the Grand Ole Opry.
“Coming out of Owen, Buchanan faced a crossroads between a managerial training program at Northern Telecom and becoming the first marketing manager in the history of the Grand Ole Opry.
Today, sitting in his office dominated by a picture-window view of the Cumberland River, Buchanan explains what made him choose the Opry. “You want to know what it was?” Buchanan says. “I just loved Bill Monroe.”
Monroe, for those who don’t know their bluegrass, is the legendary musician whose band, the Blue Grass Boys, put together the high lonesome elements that became bluegrass music in the 1940s. By the time Buchanan crossed paths with Monroe in the 1980s, the master was in his 70s.
“Buddy Lee booked Bill Monroe. I would come out to the Opry to see Bill and I developed a deep appreciation of what the Opry is,” says Buchanan, casual in jeans and blue sweater. “That was a passion that would only grow.”
“It ultimately wasn’t a hard decision to pass on the Northern Telecom job,” Buchanan says. “Yes, it was a better paying job and had a more defined career path. But I thought that the Opry job offered me the opportunity to be in a more traditional business environment while at the same time being engaged in the entertainment and music industry.
“It felt like it was the perfect fit, especially because Bill Monroe, who I’d grown to love booking at Buddy Lee, was a member of the Opry as well,” he says.
Marketing from Scratch
Buchanan found himself walking into a unique situation.
“The Opry had never had a marketing manager, meaning it had never had a marketing budget,” he says. “Most freshly minted MBAs don’t really want to go to work for a place where they don’t have a budget. That doesn’t fit in with the typical scenario.”
Hal Durham, then general manager of the Opry, put aside a modest amount for an advertising budget. Buchanan created a small, simple campaign, which started to address the identity problem his market research showed was holding the country music institution back.
First broadcast in 1925 as a radio show and for many years a national broadcasting powerhouse, the Opry was part of Gaylord Entertainment, today Ryman Hospitality Properties. By the 1980s, the Opry was overly dependent on Gaylord’s Opryland USA theme park and hotel for its audience. Both brought thousands of tourists to the area regularly, which translated into tickets sales for the Opry.
Buchanan’s efforts to revitalize and separate the image of the Opry from the theme park were successful business strategies, which was fortuitous as the park closed in 1997.
“We were also dealing with a much more competitive marketplace from a destinations perspective,” Buchanan says. “Branson, Missouri, became a major competitor. There was huge investment in the ’80s and ’90s in Orlando and then there was the proliferation of casinos around this country. That is still what we deal with today.”
The Ryman Auditorium
If there’s a proudest moment in Buchanan’s early Gaylord career, it would have to be the revitalization of the historic Ryman Auditorium. Along with much of downtown Nashville, the legendary building—former church and for years home of the Grand Ole Opry—had fallen into disrepair during the 1960s and ’70s. The Opry itself had left the building in 1974 for a new facility on the grounds of the Opryland theme park.
“I had never even been in the Ryman Auditorium, and suddenly it was part of my responsibility to market it,” Buchanan says. “This was way before it was fixed up. We charged a couple of bucks and people could tour through it. You could go stand on stage and there was a little gift shop in the back.”
Buchanan was captivated by the Ryman, even though it was in obvious physical distress. It had sat empty for almost 20 years and had been recommended for demolition several times. The building was rundown and the downtown area in which it sat was decidedly seedy.
In 1992, the centennial of the building’s construction, Buchanan was instrumental in arranging for the Ryman to be used for a series of concerts and a live album by Emmylou Harris, her landmark At The Ryman.
He also organized a one-man play with musical performances that included Bill Monroe performing “Working on a Building.”
“Ricky Skaggs and Vince Gill went on just before Bill doing ‘Drifting Too Far from the Shore’ and did such a great job that I think Monroe wanted to one-up them,” Buchanan says. “He did. He was outstanding.”
The two events were fortuitously timed. Downtown Nashville was about to undergo urban renewal, and Gaylord and Buchanan had the vision to lead the way.
“It was life- and career-changing for me because I was appointed general manager of the Ryman and got to develop the first business plans to oversee the renovation of the Ryman Auditorium,” Buchanan says. “There was a companywide belief that it was a worthy investment regardless of what it took, that it would be a meaningful and impactful undertaking for the company and city.”
If there’s a proudest moment in Buchanan’s early Gaylord career, it would have to be the revitalization of the historic Ryman Auditorium.
Under Buchanan’s direction, the old building came back to life. Structural issues were addressed. High-tech sound, lighting and engineering were installed, along with the addition of a proscenium for the stage. Central heat and air were added to the now 102-year-old former church. A 14,000- square-foot support building was attached to house ticketing, offices, restrooms, concessions and a gift shop; proper dressing rooms were built (previously, a sole ladies’ room backstage had done double duty as a dressing room for the Opry’s female performers). The building’s original wooden pews were refinished and stenciled artwork on the balcony was faithfully recreated. The Ryman reopened in 1994 to public and performer acclaim, quickly earning a reputation as one of most prestigious performance halls in the world, esteemed for its astounding acoustics.
“We’re sitting here and that was basically 20 years ago and it’s great to be able to look back and see what a visionary decision that really was for (former Gaylord Entertainment CEO) Bud Wendell to make that $8.5 million commitment and investment,” Buchanan says. Gaylord also built the Wildhorse Saloon on Second Avenue in downtown Nashville during that era.
“Both of those investments were critical for the redevelopment of downtown Nashville,” Buchanan says.
Television’s Nashville
What might be remembered as the opening of the second act of Buchanan’s career began with a meeting in late 2010 between the Gaylord executive and some West Coast talent executives. Buchanan was then president of the Grand Ole Opry and senior vice president of Gaylord Entertainment. Again, like in the 1980s, he faced the need to draw people to Nashville and the Opry.
“The first thought was film opportunities,” Buchanan says. “We were kicking around maybe a period piece that captured a moment in time of the Opry’s history and building something around the characters that made up the Opry.” That led to discussions about other film projects, television and theatrical ideas. Rejected concepts included a 30 Rock-like take on the Opry.
“In looking at shows like American Idol, where country artists were sometimes winning, and shows like Glee and Smash—there was an acceptance of performance within a scripted show,” Buchanan says. “It was my feeling that with country music, so many of the barriers had fallen by the wayside. Younger generations are not as identified by genre. They’re interested in artists and songs.
“It’s important to realize that you are creating a drama for network television … that means that things are exaggerated and a bit over the top.”
—Steve Buchanan
“And it just felt like Nashville was really being accepted and regarded as a cool place, a very strong creative community and a place where the popular music of the day is being created.”
After finding a production partner with Lion’s Gate and a writer in Callie Khouri (Thelma and Louise, Divine Secrets of the Ya-Ya Sisterhood), they pitched Nashville to all three major networks and received offers from ABC and NBC. They chose ABC.
“I really didn’t fully understand about the Nashville vibe until later,” says Loucas George, a producer of Nashville, who says he had misgivings initially about filming the show in its namesake city—mostly because of the lack of film industry infrastructure. It took Buchanan in his role as one of the show’s executive producers to demonstrate how and why Nashville itself was an important character in the series.
“I didn’t understand about the (important songwriter’s showcase) Bluebird Cafe being in a strip mall. That didn’t make sense to me,” he says. “Steve took me to the Grand Ole Opry and all these other places and I started to realize that it was important to film here.
“When I first came here, I thought Steve was going to be a silent extra production partner. He’s been anything but. He’s been the salt of the earth. He is Nashville. He constantly reminds us of the niceness of the people here.”
Khouri says that Buchanan helps to keep it real.
“He is so well-versed in Nashville that we would be very unwise not to call on his knowledge,” she says. “Personally, Steve is an absolute joy. He’s thoughtful, famously low-key and soft-spoken but with a tremendous sense of fun. He’s a fantastic ally.”
Actor Charles Esten, who plays the show’s Deacon Claybourne, calls Buchanan “the face of connectivity and the face of kindness to all of us.”
“From the start, he made everyone involved in the production feel instantly welcome in Nashville. He handles what could be an extremely demanding and stressful job with ease and grace,” Esten says.
People in the fictional Nashville are not always so nice. “It’s not a documentary, after all,” Buchanan says. “It’s important to realize that you are creating a drama for network television. You have got to be able to do something that is compelling and captures people and the genre is that of a prime-time soap opera, so that means that things are exaggerated and a bit over the top.
“But it can still have heart, passion and emotion, and the city and music community don’t have to be disappointed in the portrayal from the perspective of the characters being stereotypes that are inaccurate or dated,” Buchanan says.
Putting the characters aside, almost everyone in Nashville agrees that the cinematography of Nashville represents the city beautifully. “One of the most common comments I hear from people is that they love the way the city looks,” Buchanan says.
That’s no accident. Millions of music fans, tourists and now television viewers have been influenced to see Nashville the way Buchanan sees it—as a deep musical wellspring, a must-visit destination, and now the hip town where the cast of Nashville spins webs of deceit and music each week.
For a guy from Middle Tennessee, Brent Turner, MBA’99, sure uses a lot of nautical terms. That may be the impact of having lived near the Puget Sound in Seattle for the past 12 years, but his choice of words is fitting nonetheless. Turner is helping steer the future of Owen as chair of the school’s Alumni Board, and his enthusiasm, drive and leadership are just the types of invaluable assets you’d want in someone at the helm.
When Jim Bradford, Dean of the Owen School, asked him to lead the board last year, Turner was both honored and surprised. Even Turner’s assistant good-naturedly asked him if he was absolutely sure Bradford was serious. (Those are the kinds of self-effacing stories Turner likes to tell about himself.)
“I didn’t immediately tell [Bradford] yes, but I didn’t have to think about it long,” says Turner, Executive Vice President of Call Products for Marchex, a Seattle-based digital call advertising company.
That’s because of his deep-running zeal for all things Vanderbilt. Turner is one of the youngest members of Owen’s Board of Visitors, composed of corporate leaders from some of the world’s most prominent companies, who advise the dean on curriculum, the needs of the business community and the overall strategic direction of the school. He also serves as a class representative on the school’s Alumni Council, which encourages alumni participation and promotes philanthropic support. He even keynoted last year’s Discover Weekend for prospective students and has helped hire Owen graduates. And as if that isn’t enough, this marks his third year on the Alumni Board and second as its chair.
“He’s a passionate guy,” says Dave DiFranco, MBA’99, a Principal at private equity firm Blue Point Capital Partners. “Whatever he decides to spend his time on, it’s 100 percent. That’s true about SEC football, the Titans, the Owen School. That’s how he is, and he inspires others, like me, to get involved, too.”
Having a well-respected classmate lead the Alumni Board gives DiFranco a sense of confidence. “He’s not afraid to deal with tough stuff,” he says of Turner. “You might not always like what Brent has to say, and he doesn’t shy away from the tough issues. But that’s what a leader does.”
Turner’s decision to immerse himself in board activity at the school was fueled in part by Bradford’s all-hands-on-deck approach to bringing Owen closer to its goals. “He understands,” Turner says, “just how important it is to have as many people in the boat as possible if you’re trying to turn it.”
Part of the Returns
Turner was inspired to accept a leadership role because he saw that Bradford valued alumni input and sought answers to difficult questions. “I was impressed,” Turner says, “that he was willing to tackle what had been the central issue at Owen, which was: ‘What is the school’s strategy going to be? What’s going to be the role of rankings in determining our success?’ That’s a very hairy conversation to have, but I noticed him having it at both the Alumni Board level and Board of Visitors level as well as with faculty and staff.”
“The period in my life when my perspectives on the business world, and the world in general, opened the most was the two years I spent at Owen.”
—Brent Turner
“Brent is a doer, a no-nonsense guy who is passionate about Owen and committed to its success,” Bradford says. “These qualities are the reason I picked him for this job.”
Turner bears in mind that many of his fellow board members travel thousands of miles for meetings because of a strong desire to “move things forward,” as he says. He has redesigned the Alumni Board into a working board, with teams to help support the school in targeted areas, such as alumni connectivity, student recruitment, career placement and fundraising.
Members have assignments and goals and report their progress regularly. “The idea is to make it meaty enough that it’s appealing but not so bad that it smacks of volunteer labor,” Turner says.
Fellow Alumni Board member Russ Fleischer, MBA’91, who is CEO of HighJump Software, a supply chain management software company, offers his own take on Turner’s style. “He’s not shy about reaching out and getting people involved,” Fleischer says. “Like so many of us, he has a strong passion for the school. That’s the attribute we both share—a deep passion for the school and a deep willingness to do whatever will help the school succeed and thrive in the future.”
Turner’s personal focus as a board member—improving alumni engagement—is approached with his usual fervor. His challenge for his fellow alumni: “I’m going to invest now with my time, talent and treasure because I want to be part of the returns.”
Turner’s board experience has helped him see the value of every contribution. With classmate Alli Zaro Fitzgerald, MBA’99, he hosted a well-attended webinar in 2011, in which he presented his thoughts about the school’s strategy. He followed with a live presentation to Seattle alumni.
“I think that everyone who attended left the call with a renewed enthusiasm for Owen,” says Fitzgerald, Director of Finance and Marketing at SecuriCheck LLC, a background research company. The positive vibe was created in part, she says, by Turner’s characteristically frank discourse, particularly about the elephant in the room—the perception by some alumni that the Owen School is undervalued in rankings. His message was clear: Any advancement will come about in large part from increased alumni involvement on many levels.
Turner is quick to say that no one considers rankings the only end goal, knowing that a school’s position can ebb and flow for no apparent reason. However, he says most people acknowledge that some of the rankings contain legitimate, objective measures of success and have to be heavily considered when planning and building strategy. In particular, they matter to prospective students and recruiters, who often perceive rankings as a litmus test of a school’s performance.
“The philosophy for a long time has been to build a world-class business school and the rankings will follow,” he says. “There’s a lot of that that’s true, and a big part that’s not true. There are some tough choices that have to be forced by the market. The dean’s big contribution is the message that we ought to take these more seriously, but we shouldn’t sell out.”
Alumni support is “the real chicken or the egg issue,” Turner likes to say. He believes that, if Owen is to make significant strides forward, alumni need to engage and support the school now instead of waiting to see if the new strategy works. It won’t be successful, he says, without their participation.
After receiving some lackluster class alumni giving numbers via email in January, Fitzgerald recalled that it took about 30 seconds for another email to hit her inbox. This one, from Turner, simply said, “Let’s talk.” Within minutes, a five-point plan was in place to stimulate class participation.
“He’s not afraid of difficult truths and approaches them head-on,” Fitzgerald says. “Yet he’s very approachable. He doesn’t lead by intimidation or try to impress everyone.”
Getting Somewhere Together
When analyzing problems, Turner relies on his training as an engineer to help him remain dispassionate. “That’s a gigantic asset in the business world,” he says. In the same breath, though, he admits to being not as strong in other areas. “On the other end, I struggle a lot with ideation and creativity,” he says. “I’m completely lost in a marketing meeting or going over advertising copy.”
Turner majored in electrical engineering at the University of Memphis and went to work for Porter-Cable, a power tool company in Jackson, Tenn., after graduation. He was with Porter-Cable for nearly four years as parent company Pentair positioned the brand for sales in big-box stores.
“As an engineer, I had a chance to be in a lot of the management meetings,” he says. “But I also walked the shop floor a lot and got to understand the differences between what the management team was trying to accomplish and what was actually happening on the front lines. It was very valuable. I learned how important it is to care about the people you are working with and who work for you. I learned the importance of clarifying their roles and making them feel safe if you wanted their best performance.”
That perspective led him to think seriously about entering management. “I can do this,” he thought.
Turner got to know an MBA intern from Kellogg Graduate School of Management at Northwestern who was sent by Pentair to evaluate Porter-Cable’s progress. The intern encouraged his interest in business, and Turner enrolled in some accounting classes locally. Surviving those, he then decided to take the GMAT, apply to “the big MBA schools,” as he says, and see what happened.
“The best fit, easily, was Owen,” Turner says. His interview was affirming and straightforward. Everyone he met “was being real with each other,” he says, “and I did not forget that.”
His Vanderbilt degree gives him a great deal of pride these days. “I will say that easily the period in my life when my perspectives on the business world, and the world in general, opened the most was the two years I spent at Owen,” he says.
His classmates were “phenomenal,” he says, and his training matched that of his peers in the industry, adding, “I can’t imagine it being much better.”
While there was pressure on Turner and his classmates to do good work, “what emerged was a collaborative, participatory environment,” he says. “It was a culture where everybody kind of understood we were all trying to get somewhere together. That’s not necessarily true in a lot of schools.”
Ray Friedman, the Brownlee O. Currey Professor of Management and Associate Dean of Faculty and Research, remembers Turner as a stellar student, respected by his classmates. “He was focused on managing people and had a sense of the importance of relationships,” Friedman says.
“Brent’s got a level head about him and a way of building relationships. He’s focused on what we have to do and the need to get beyond planning and brainstorming to saying, ‘Let’s make things happen.’”
—Ray Friedman
He’s been equally impressed by Turner’s work as an active alumnus. “He’s got a level head about him and a way of building relationships,” he says. “He’s focused on what we have to do and the need to get beyond planning and brainstorming to saying, ‘Let’s make things happen.’”
After graduating from Owen, Turner did a short stint with a private equity group in Dallas before moving to Seattle and a company called Avenue A, a startup focused on Internet advertising. Over the next nine years, Avenue A became aQuantive, which in turn became the biggest acquisition in Microsoft’s history at a reported $6 billion in 2007.
Turner, who had been Vice President of Operations for aQuantive, moved into the role of General Manager for Search and Media Network Businesses for Microsoft. He was part of the 2008 global rollout of Microsoft Media Network, Microsoft’s online display media business. Then, in 2009, he helped lead the global launch of Bing, a Microsoft Web search engine that now also powers Yahoo! Search.
From Microsoft, Turner headed to Marchex, a publicly traded company that is experiencing rebirth through a focus on digital call advertising. Marchex helps companies reach the right prospective customers using mobile media.
Instead of advertisers calling customers, smartphones provide the opportunities for consumers to place calls through the digital ads that they encounter while searching and browsing the Internet. “Most advertisers are intimidated by the complexity of figuring out how to place all those ads effectively,” Turner says. “That creates a role for an intermediary. We develop relationships with publishers of mobile advertising and make placing ads with them easy. Our job is to drive phone calls for our advertiser partners in a way that works for them economically and is not overly complex.”
Turner enjoys being on the front end of this new frontier in advertising. “There are a lot more opportunities than most people realize in these early stages,” he says.
Understanding the Conversation
Not surprising, Turner directs his energy into volunteer work in Seattle as well, chairing the board of REST, or Real Escape from the Sex Trade, a faith-based organization that seeks to divert at-risk minors from being trafficked into prostitution. There are a surprisingly large number of minors working as prostitutes in the Seattle area: REST puts current estimates at 450.
“In the garden variety case, a girl has a broken relationship with her parents and becomes a runaway,” Turner says. He explains that she might take a job in a strip club or a bikini barista stand where she is then befriended by a pimp who makes her feel special, at least initially.
Turner channels his business acumen into understanding, as he says, “the demand side of the equation so we can come up with strategies for reducing the number of ‘johns’ hiring the girls.” REST also works to proactively identify girls who are at risk and give them alternatives.
“We want to find choke points where we can prevent them from entering the life. We want to help them find work and understand their identity—that they are children of God,” he says.
The work is difficult and emotionally demanding—“This ain’t for everybody,” he explains—but it’s ultimately rewarding when girls come out of life on the streets.
Although Turner loves Seattle and is connected to the city in many ways, he relishes each opportunity to return to Nashville. When not in meetings at Vanderbilt, he often hops in his car for a visit to Columbia, Tenn., where his mother lives.
“I probably see her more often than most parents with local children,” he says with a laugh.
That filial devotion is not unlike the commitment he feels toward Owen. Turner believes that the school and its focus on an intimate community should not be taken any more for granted than a parent. It’s a message he hammered home in a speech to last year’s graduating class. “Make sure you appreciate just how special our culture is at Owen. Don’t forget just how awesome your classmates, faculty and fellow alumni are because you have had the opportunity to get to know them so well,” he said in the speech.
Turner is frequently reminded of the high caliber of people associated with the school, particularly in his work with the Board of Visitors. “This is an impressive stakeholder group,” he says. “These people are used to board seats and understand the conversation. They’re very good at getting their fingers right on some of the key issues or root drivers of problems and then stating their views on how to solve them. It’s pretty amazing in that crowd how quickly you go from stating an issue to some fairly clear and prescriptive input at a tangible level.”
As deserving as Turner is to be among those Board of Visitors members, he can’t help but inject some self-effacing humor into the discussion of his own place on the board. “They’re lowering their standards to have me on this thing,” he says. And then, he pauses to reflect on the scope of his alumni work at Vanderbilt.
“In my life, I’ve had the opportunity to do lots of things that are pretty amazing,” he says. “This is one of them.”
Mario Ramos has a hard time containing his excitement about the freshly unveiled Americas MBA for Executives program at Vanderbilt. To hear him talk, you’d think that he’s among the inaugural class of 12 Owen students who’ll be traveling to Brazil, Canada and Mexico in the coming months to learn about those economies. He’s not, though: Ramos, EMBA’10, already has earned his business degree, and if there’s any disappointment in his voice, it’s because he never had a chance to reap the Americas program’s benefits.
“I had to learn it the hard way,” says Ramos, Vice President of Engineering at Schneider Electric, one of the multinational companies that not only have a huge Nashville presence but also make Vanderbilt and Music City an ideal hub for this new style of international education.
Schneider Electric brought Ramos, a native of Mexico, to Nashville, and he has since grown with the company, tasting the increasingly global flavors of modern business firsthand. His experiences have afforded him valuable insight, which Tami Fassinger, BA’85, Associate Dean of Executive Programs and head of the Americas program at Owen, gladly welcomes. Ramos is among several alumni who have helped shape the program with their advice.
Fassinger stresses that businesses cannot rely on the same old parochial strategies in this global era, and so the Owen School has tailored the Americas program, which officially launched in early August, to offer its participants something new and different. To borrow a phrase from modern combat journalism, the program “embeds” students in international experiences while they work toward their MBAs. In addition to learning about global business management practices in the classroom, students gain real-world preparation on the ground, both in Nashville and thousands of miles beyond.
“One of the important things about this program is that by having discussions with people who do business directly in those countries, we’ll have debate and ask questions as to what is the right answer.
The conversations will be diverse.”
—Mario Ramos
The Americas students spend the first year at their home schools, with some interaction with one another via the Web. Global study teams are then formed during the second year by making use of technology for conferences and virtual meetings. The second-year students also rotate together to each campus for immersion in weeklong residencies that incorporate each locale’s cultural advantages and challenges.
Fassinger says that students will work both virtually and hands-on “across borders, language, culture and time zones … on various coursework assignments and a yearlong capstone project.” The academic payoff is that each student will graduate with an Americas certificate conferred by the four participating universities as well as an MBA from his or her home school.
“More important,” she says, “they will have taken a deep dive into expert topics by Americas region and school, spanning everything from family-owned enterprises unique to Mexico to cross-cultural negotiations in Canada to sustainability models in Brazil to launching new ventures in the U.S.”
As a practical matter, managers will be sharpening international networking skills each step of the way. Learning how to apply those skills across linguistic and geographical borders is one of the most important aspects of doing business globally, says Ingrid Calvo, EMBA’09, a native of Colombia who works as International Controller for Gibson Guitar.
“In other countries it’s mostly about relationships,” as opposed to in the U.S., where “you get down to business right away,” she says. In her work, which now has her heavily focused on China, it’s critical to establish and maintain business relationships with government officials and business partners.
Calvo can testify to the effectiveness of her Vanderbilt MBA in these situations. “It has provided opportunities for me, has strengthened my core skills in managing global business, and has better prepared me for additional expatriate assignments,” she says.
She admits, though, that the international component of the Americas program would have been ideal, had it been available. “If given the choice,” she says, “I would have preferred to have been part of the Americas program.”
Ramos, who hopes to direct Schneider employees into the program in the future, knows from experience how valuable cross-cultural pollination can be. “When Tami first mentioned the possibility of opening up an Americas program, I was pretty excited,” he says. “It’s a tremendous opportunity. There are a lot of people in Latin America who could benefit from this type of program.”
And it’s equally valuable for Americans looking to the greater world market for production and distribution, Ramos adds. “It will help companies managing teams or trying to build their businesses in Latin America,” he says. “It will give them a lot of insight into the local environment—how to do business there, how to deal with the government, how to do business in a different culture.”
Schneider Electric, a global specialist in energy management, has 130,000 employees worldwide, producing a variety of systems that are designed to manage and conserve energy. The company has spread into markets like India and China, but Ramos says the Americas program’s lessons will translate anywhere. “There are various ways of going to market. Organizational behaviors are affected by different cultures with different values,” he says. “You need to understand how that works to really be able to do business in these countries.”
Looking at an Entire Hemisphere
As new as the Americas program is, international business has long been a focus for Owen. The idea for such a program was first planted soon after the establishment of the North American Free Trade Agreement (NAFTA) between the U.S., Canada and Mexico in 1994. “About 15 years later, we were finding that our Executive Development Institute client companies were looking at an entire hemisphere rather than individual countries for management decisions,” Fassinger says. “When we started to notice that, we thought that we needed to address it pragmatically.”
In the late ’90s, Owen experimented with a short-lived International Executive MBA program based in Miami. The IEMBA students were bright and hard-working—many of them have since gone on to prosperous careers in the Americas—but the logistics of the program itself proved too challenging. Among the roadblocks to the Miami venture were the lack of a Vanderbilt facility in the city and the added complications of monthly travel time and expenses for participants.
After talking with IEMBA alumni, Owen took steps to ensure that the Americas program is more practical than the Miami experiment. Fassinger says physically locating the new program at Vanderbilt is important because the university already has an acclaimed Center for Latin American Studies with which Owen can share human and academic resources. Also the decision to schedule weeklong residencies during the second year, as opposed to biweekly or monthly classes in each location, means less travel for those involved.
In all, the Americas program provides a more balanced approach than its IEMBA predecessor—as Fassinger says, it’s “a complete immersion experience and a complete Vanderbilt experience.”
Of course, practical concerns, such as tuition, credit and diplomas, had to be worked out prior to launch. “One of the things institutions struggle with is: How do you transfer credit? How do you figure out admission differences?” Fassinger says. “We decided only to enroll our own students and not share revenue, so we went with schools that have great admissions standards of their own. Second, we figured out a formula where we all are responsible for an equal part of the delivery of the second-year residency experience.”
Each of the partners brings something unique to the residency weeks. For example, in Vancouver, an international city with strong Asian business interests, focus will be placed on cross-border negotiation and collaboration. Meanwhile Brazil will offer lessons in sustainability and bottom-of-the-pyramid marketing. In Mexico, where most of the businesses are family-owned, attention will be paid to global competitiveness among such companies.
“When they come to Vanderbilt, they will look at American innovation,” Fassinger says. “We’ve been talking to the big companies that make Nashville great: Nissan, Bridgestone, LP, Schneider, Gibson. And we will use the Nashville Entrepreneur Center to show how to launch startups that can become the next multinational companies.”
Interaction with prospective students in the U.S. showed there was a need for the Americas program. “They wanted a deeper global experience than what we had previously offered,” she says. “We surveyed our pool of candidates, and it was clear there was a demand for it.”
Ramos says that Vanderbilt already has an international mindset, but in the past, much of the discussion was “very U.S.-centric” by nature. “One of the important things about this program is that by having discussions with people who do business directly in those countries, we’ll have debate and ask questions as to what is the right answer,” he says. “The conversations will be diverse.”
Universal Business Principles
William Thomas, BE’92, EMBA’11, Executive Director of Quality and Sales Engineering for Bridgestone Americas, just graduated from the Executive MBA program in July. Like Ramos, he is somewhat envious of the opportunities that await the students enrolled in the new Americas program.
“If this international program had been available when I was starting in ’09, I absolutely would have taken it,” he says. “Our business, the tire business, is becoming more of a global game. The managers in the 21st century need a global perspective.”
Bridgestone provides training to prepare employees for the international market, but Thomas emphasizes the value of the Americas program. “By having them physically take classes in Canada, Mexico and Brazil, it puts them in contact with other cultures and begins the process of changing the way they think about doing business in another country,” he says.
With Bridgestone, Thomas learned international business by serving as Assistant Plant Manager, Responsible for Quality Assurance, at the company’s Buenos Aires facility. “What I discovered with my experience in Argentina is that there are universal business principles that can be applied across borders,” he says. “But the cultures you operate in require you to modify your approach to make yourself more effective.”
Thomas is now investigating how this new program might benefit his staff. “I’m talking to two of my managers in Argentina who are contemplating going back to school and getting their MBAs in Buenos Aires,” he says. “I asked them to consider going to Sao Paulo and getting in this Americas program instead [through FIA, Vanderbilt’s partner in Brazil].”
Thomas also looks around the Nashville office to identify Bridgestone managers who are hoping to supplement the international preparation they already receive at the company. One such employee is enrolled in the inaugural Americas class: Bridgestone’s Phillipia Pundor, Section Manager, Global Mobility and Immigration.
“We have a number of teammates who work on foreign assignments outside their home countries,” Pundor says, pointing to the approximately 50 expatriates she assists throughout South and Central America as well as in the Netherlands, Portugal, Liberia, the Democratic Republic of the Congo, India, Thailand and Japan.
Pundor, who has a background in industrial/organizational psychology, says the Americas program offers precisely what she needs. “I’ve looked at a number of different graduate programs, and Vanderbilt was definitely the most attractive,” she says. “This will put me in a position of growth and opens a lot of avenues into roles across the organization.”
Fellow student Jon Haworth has a similarly positive outlook on the program. He, however, took a more indirect path to it. The Vice President of Product Innovation and Plant Operations at Des-Case Corp., which manufactures filtration products for industrial lubricants, was set to enter the Executive MBA program a year ago, but the birth of his son put his enrollment on hold.
It was a fortunate turn of events.
“As they rolled out the Americas program, I quickly jumped over to that, because the international component of our business has been growing so fast. There will be things I learn from Day One in this program,” he says. “It’s exactly what I need to move up in this company.”
“It’s not just a typical international program where you talk about how business is done elsewhere. In this case, you actually experience it.”
—Jon Haworth
The son of Baptist missionaries, Haworth grew up in Brazil and is fluent in Portuguese. He also has worked abroad quite a bit for Des-Case, which sells products in 52 countries. His experiences overseas have impressed upon him the need for broader international skills.
“The American way doesn’t always get the job done,” he says. “On the other side of the world, they approach it from a totally different perspective.”
His understanding of this fact has made him appreciate the opportunity at hand all the more. “It’s not just a typical international program where you talk about how business is done elsewhere,” he says. “In this case, you actually experience it.”
He adds, “I haven’t heard it stated this way elsewhere, but in my opinion, while this program focuses on the Americas, the things you learn can transfer elsewhere. It’s really a global program, even though it’s not marketed that way.”
Fassinger agrees. “Jon is right that the learning can transfer,” she says. “We just made the decision to be more thorough about the nuances in the Americas, rather than spread ourselves too thin across many cultures.”
Congruent to the Culture
Michael Bowling, EMBA’97, grasps the idea of transferring knowledge as well as anyone. He talks with satisfaction about his experience as an Executive MBA student and how it helped him prepare for his current role as President of AT&T Mexico—a remarkable leap considering that he had never traveled outside the U.S. prior to his Owen experience.
Bowling went to work for AT&T 21 years ago with an electrical engineering background, but it was his desire to explore a different career path that brought him to Vanderbilt.
“I looked for a program that had the kind of impact that I thought I wanted on my career,” he says. “I wanted an executive program to learn the business half to help in my progressions.”
The lessons he learned were invaluable, he says, adding that Owen planted the seed that led him to work in Venezuela, Peru and now Mexico. “On our class trip [the required international residency], I think it was the first one for the EMBAs, we were here in Mexico City,” he says, recalling that he sat in the city center and “sketched out a plan to be an expat.”
After that trip, he became determined to take his career global.
“And here I am,” he says with a laugh.
These days, he’s loaning his expertise to Fassinger and her colleagues at ITAM in Mexico City. “I’m very positive about the program,” he says. “I think it will be great.” In particular, he believes the expanded international study component will pay off.
“It’s critical for leaders in business today to not just understand, but to be able to be effective in a global environment,” he says. “What you’re trying to do is reach your business objectives, but they should be congruent to the foreign culture you’re operating in. You aren’t going to be able to change the foreign market to fit your paradigm.
“The ones who aren’t successful are the ones who can’t drop out of their own mindset, the ones who say, ‘This is how we do it in the U.S.’ You might as well say, ‘This is the way we do it on the moon.’”
Market impact. It is part of the very fiber of Owen’s finance department. Members of the school’s finance faculty are not only contributing to the industry’s intellectual underpinnings and analytical tools but also training students who, as Vanderbilt alumni, are putting theory into practice worldwide. We look here at some of the key players who are helping shape the face of modern financial management.
At the Center of Research
The sweep of history represented by the finance faculty is nowhere more dramatically represented than in the Financial Markets Research Center (FMRC). Founded in 1987 to foster research in financial markets, instruments and institutions, it has long promoted interaction among executives, researchers and the Owen faculty, particularly through its renowned annual conference. Hans Stoll, the Anne Marie and Thomas B. Walker Jr. Professor of Finance and Director of the FMRC, calls the center “our window on the real world and our connection to what’s going on and the issues that face policymakers and financial executives.”
Stoll is known for developing put-call parity and for seminal work in market microstructure, which has become a major subfield within finance. He is also credited with providing analysis that demystified the role of futures in the crash of 1987, leading to a more balanced approach to regulation amid calls for drastic measures. The breadth and depth of his work have earned him one of the industry’s most stellar reputations—he has been elected President of both the American Finance Association and the Western Finance Association—and the markets still bear the stamp of his contributions.
Tom Ho, who has worked with Stoll since they co-authored papers at the Wharton School in the late ’70s, serves as the FMRC Research Professor of Finance. Through voluminous research, papers and books, Ho has been key to introducing rigorous mathematical modeling to securities. His work with the Thomas Ho Company, providing analysis and consulting to financial institutions, is an example of the integration between Vanderbilt finance research and the business world. It also demonstrates how the FMRC is bringing together all the elements of financial education, research, practice and policymaking.
The huge impact Owen has had on the world of finance grows larger this year with the introduction of NASDAQ OMX Group’s Alpha Indexes. Developed by Bob Whaley, the Valere Blair Potter Professor of Management, and Jacob Sagi, the Vanderbilt Financial Markets Research Center Associate Professor of Finance, the indexes help investors isolate the performance of individual stocks or commodities from broader shifts in exchange-related funds. This will, according to Sagi, “allow investors to understand correlations better and allow for interesting hedging opportunities.”
The idea for the indexes started when alumnus Eric Noll, MBA’90, who serves as NASDAQ OMX Group’s Executive Vice President of Transaction Services, turned to what he calls the “academic firepower” of Whaley and Sagi for help in developing new NASDAQ products. Noll was looking for something of the caliber of the Market Volatility Index (VIX), or “Fear Index,” created by Whaley for the Chicago Board Options Exchange in the early ’90s. The VIX, which quantifies the market’s expectation of short-term volatility, has become a highly influential measure; a futures contract based on it has traded publicly since 2004. Sagi, an expert on asset pricing and decision theory with wide-ranging research and practical interests, has conducted research with Whaley on relative performance indexes.
The NASDAQ OMX Group is offering derivatives of the indexes that will allow investors—primarily institutional at first—to bet on or guard against fluctuations in the worth of securities or funds. The products are designed to help investors hedge against the kind of market swings exemplified by last year’s “flash crash.” The collaboration between Vanderbilt and NASDAQ is, Sagi says, “the kind of thing that demonstrates how you can take research-based knowledge and apply it in a way that helps people and brings value to the market.”
As veterans on the finance faculty, Professors Bill Christie, Nick Bollen and David Parsley represent a wellspring of theoretical and applied knowledge, transmitting real-world experience and academic rigor to the classroom. Their accomplishments are among the school’s most noteworthy.
Christie, the Frances Hampton Currey Professor of Finance, analyzed NASDAQ pricing in the ’90s and found that market makers were implicitly colluding to maintain artificially high trading profits at the expense of investors. His research led to sweeping reform of the NASDAQ market, the introduction of the SEC Order Handling Rules and a billion-dollar settlement. Christie also served as Dean of the Owen School from 2000 to 2004.
Bollen, the E. Bronson Ingram Professor in Finance, authored a cutting-edge 2008 study of hedge fund liquidity that quantified the risks to investors facing the restriction or suspension of withdrawals from hedge funds during market turmoil. The subsequent financial crisis bore out his conclusions, as many funds closed and others were revealed to be fraudulent. His most recent research focuses on predicting which funds are at a higher risk of fraud by examining their statistical footprints for peculiarities best explained by misreporting.
Parsley, the E. Bronson Ingram Professor in Economics and Finance, has shown through his research into political connections and lobbying that the portfolios of firms with higher lobbying intensities and expenses outperform those of firms without such connections. He also has discovered that politically connected firms appear to be less sensitive to market pressures to increase the quality of financial information given to minority shareholders. His current work includes seeking explanations for the globally declining impact of exchange rates on prices.
The Owen finance faculty’s reputation continues to grow thanks to newer members like Alexei Ovtchinnikov and Miguel Palacios, both Assistant Professors of Finance. Ovtchinnikov has done widely cited work on corporate political contributions, showing in a large-scale study published in The Journal of Finance that there is a positive and significant relationship between such donations and both stock returns and return on equity. His follow-up study examined the nature and effectiveness of individual contributions, particularly to politicians with oversight of industries having economic impact on contributors. Ovtchinnikov is now looking at the flip side of the coin, studying the way government policy affects corporate decision-making.
Palacios’ work on human capital, its quantification and its effect on other assets’ prices, is decidedly and excitingly off the beaten path. One question he raises is what effect the retirement of baby boomers, who will no longer have future earnings as an asset, will have on the value of stocks. Another is the possibility of a financial instrument tied to future earnings, and whether such an instrument “might make people willing to take more risks in stocks and other investments, changing their price and return,” he says. He and a business partner have explored the practical aspects of his questions for the last nine years, founding a company called Lumni Inc., which pays for the education of young adults—many who could not afford college otherwise—in exchange for a small stake in their future earnings. His book Investing in Human Capital: A Capital Markets Approach to Student Funding was published by Cambridge University Press in 2007.
Australian-born Kate Barraclough jumped at the chance to take a more active role in oversight of the school’s Master of Finance (MSF) program. As its Director, she says, “I see myself as taking an already excellent product and raising its profile by engaging and coordinating its stakeholders—faculty, alumni, employers and current and future students. My aim is to build a great program, recognized as one of the best in the country.”
Her background is yet another example of the way in which research, teaching and real-world experience come together within the Owen faculty. A former manager at KPMG Canberra and financial consultant to the Australian government, she has research interests that include asset pricing, derivatives and bond markets. Under her guidance, MSF has introduced a new course on financial modeling (which she teaches), formed a board of advisers made up of distinguished alumni and friends of the school, and created an internship program for the MS Finance Class of 2012. The latter was an initiative proposed by alumnus Bruce Heyman, BA’79, MBA’80, who is Managing Director and Partner at Goldman Sachs in Chicago and a member of Owen’s Board of Visitors.
Barraclough is working to encourage cohesion within the MSF group with a number of MSF-only classes. “A key part of my role is mentoring our students, encouraging and supporting them while they are at Owen,” she says. “Seeing them grow through their experiences at Owen is extremely rewarding for me.”
Wall Street Presence
It would be difficult to overstate the Vanderbilt presence in the world of business and finance. Thousands of graduates carry the lessons learned here into boardrooms, exchanges and regulatory offices worldwide. One notable example is Sean Rogers, BA’87, MBA’95, a key figure in one of the two largest financial institutions on Wall Street.
Rogers serves as Managing Director at Bank of America, overseeing communications technology. He works closely with senior management at companies like Nokia, Ericsson and Motorola, advising them on an array of financial matters, including capital formation and structure, corporate finance, mergers and acquisitions, joint ventures and IPOs. It is a job that requires wide-ranging knowledge applied to complex but specific situations in real time, and he cites his increasing appreciation of the “softer skills” he learned at Owen.
“It’s learning how to study,” he says, “how to work in teams, how to communicate with your counterparts. As you become more senior in investment banking, what makes someone good or bad comes down to qualitative skills. You’re more concerned with building relationships, with understanding issues. You become results-oriented.”
More and more, those relationships transcend borders and backgrounds. “That’s why both the student mix and the interdisciplinary possibilities at Owen, like those with the Vanderbilt University Medical Center, are so valuable,” he says. He also cites the class size and the close relationships he was able to develop with both students and professors. He has long since been returning the favor, bringing his business expertise to Owen as a member of its Board of Visitors—something that is particularly important in that Bank of America has become the single biggest recruiter of Owen grads.
Tools of the Trade
Vikas Dwivedi, MBA’00, says his career has become “all energy, all the time.” After stints at Shell Oil, Enron, Prudential Equity Group and Morgan Stanley, and a rating as No. 1 stock picker in electric utilities in 2004, he is bringing his experience in energy and commodity trading, private equity, project development, operations and engineering to bear on his own firms. He is a Principal at BTU Capital Management, a Houston-based hedge fund focused squarely on energy, and Quantum Energy Partners, a $5 billion private equity firm.
“It’s focused on natural gas,” he says of BTU, “and our trades will allocate capital directly into futures and options on the commodity itself.” He came to Owen as an engineer and an energy trader, but says, “I didn’t have any real sense for the broader capital markets and the bigger world. Seeing how those markets work and how they impact each other and impact energy was very helpful. It gave me a much bigger perspective on how stuff is really put together. And not having a financial background, it was a really good rounding experience to learn accounting and a little more on corporate valuation.”
In addressing students and recent graduates, he encourages creativity and daring. “Never assume everything’s been solved,” he says. “There are always other markets and other problems if you can help solve or even identify them. I’d also recommend a bit of irreverence for the way markets work. They’re not perfect. See if you can insert yourself into something that’s not quite right, which is always an opportunity.”
Four years ago Christopher Parks found himself facing an all-too-common dilemma. He and his mother, who was in the midst of cancer treatments, were sitting in her living room going through a stack of her medical bills and those of his father, who had died recently.
It is a telling indictment of the daunting complexity of health care billing that Parks, despite 17 years in the industry, felt as overwhelmed by the paperwork as did his mother. It was she who put the situation into words.
“She looked at me with tears in her eyes and said, ‘Honey, I want to know who I owe, what I owe, and if it’s fair,’” he says. “To hear someone who was in chemotherapy and heading toward hospice say that as she wrote out a check for $20,000—well, that was the moment I knew I had to do something.”
Billing represents one small corner of an American health care system known for flaws that seem inextricably bound to its undeniable strengths. In technology and drug development, quality of hospitals and physicians, availability and speed of delivery, it is the world’s gold standard. But it is staggeringly expensive, needlessly redundant, and too often out of reach for tens of millions who have little or no coverage.
For Parks, his mother’s plea was the starting point for a new business venture that has slowly and sometimes painfully refined its mission to bring light to the billing process for employers and employees.
For the rest of the health care world—often-competing constituencies including physicians, hospitals, insurers, pharmaceutical companies, device manufacturers and the investment community—the future is a complex and uncertain foray into a new health care universe. All of them must sort through the thousand pages of legislation, the politically charged implementation process and the legal wrangling that are all part of the Patient Protection and Affordable Care Act, the 2010 bill that will no doubt change American health care forever.
Parks admits that his journey, begun well before Congress took up the trillion-dollar health care bill, involved any number of blind alleys. “We spent two years getting it totally wrong,” he says. “We started off trying to give everyone tons of data points, information about cost, quality, utilization, what other people thought, and so on, and we created this wealth of broad decision-making information. The feedback we got from both users and employees was, ‘Oh, my gosh. That’s too much. I just need one thing answered.’”
The process was also hampered by the fact that large insurers and the government were simply loathe to share information. Ultimately the company he formed, change:healthcare, evolved to offer self-insured companies and their employees easily understood information on medical provider cost, quality, access and performance to help them make educated decisions.
Parks, the company’s President and CEO, sees the approach as vital in the face of legislation that greatly increases the pool of covered individuals, making their decisions an important part of any hope for fiscal responsibility. “With the increase in access to coverage, there will be increased demand and desire for both information and transparency, for more insight both to control cost and make choices,” he says.
A key element is the point at which potential savings prompt behavior change, and for that Parks turned to two friends at Vanderbilt Owen Graduate School of Management.
My simple problem with the health care legislation is that it wasn’t focused on cost, and we will have to address cost next year, the year after and every year going forward.
—Larry Van Horn
“Luke Froeb and Larry Van Horn surfaced as two really bright, insightful guys who know how to look at problems from different angles and who could help us evolve what we’re developing,” Parks says. Froeb, the William C. and Margaret W. Oehmig Associate Professor in Entrepreneurship and Free Enterprise, and Van Horn, Associate Professor of Management, have been studying pricing and behavior. They welcome the increased pool of information for examining a pivotal portion of the health care equation.
“My simple problem with the health care legislation is that it wasn’t focused on cost,” Van Horn says, “and we will have to address cost next year, the year after and every year going forward. The reality is people will have to pay more and make difficult decisions as part of a long-range solution.”
The change:healthcare approach, Van Horn adds, involves “trying to figure out the simplest, most concise way of solving the consumer’s problem by massaging the data behind the scenes and doing analysis. They’re trying to simplify the patients’ process, walking them through a thought process that is meaningful and important to them.”
That patient is the hub about which all else in the legislation and in the health care world revolves, and every constituency faces dramatic changes. The one with the most to gain, at least in the short term, is hospitals.
“We provide a fair amount of underfunded and unfunded care,” says Larry Goldberg, CEO of Vanderbilt University Hospital and an at-large board member of the Tennessee Hospital Association (THA). “The idea that there will be more coverage—with 32 or 36 million more Americans now having insurance—is very appealing.”
He and others are very aware, however, that those gains may well be short-term. “Obviously payment reductions and questions about how all this is going to be financed concern us a great deal,” he adds.
Members of the Hospital Alliance of Tennessee, an organization of the state’s nonprofit hospitals, are hoping the rollout of health care reform draws on the lessons of the TennCare program, which saw the state tackle managed care beginning in 1994.
“If you know the history of TennCare,” says Paige Kisber, the Alliance’s President and CEO (Goldberg is its Board Chair), “you know that it was the right idea in terms of attempting to bring insurance coverage to more people, but that it just didn’t quite work the way the state hoped. My understanding is that as this federal legislation was being crafted, they looked at what has happened in Tennessee and what is happening in Massachusetts.”
Early hopes for TennCare faded amid reports of fraud and sloppy management. Costs soared, and a 2003 study declared the program was not financially viable. TennCare has since considerably scaled back enrollees and coverage. For the state’s hospitals, even the best of times were problematic.
“With TennCare we saw more people insured, but it did not take away under-reimbursements, and charity care did not go away,” Kisber says. “The state had the best intentions, but there are so many other economic pressures. Given education, prisons and many other programs, you have to prioritize, and you cannot deliver all services to all people.”
That makes it especially important, according to Kisber, that the state’s health care history remain part of the equation. “As the federal government writes these regulations, they will seek public input, and we feel like that will give us the opportunity to bring our experience and expertise to bear on things like eligibility criteria,” she says. “That input will be vital at a time when there will be increasing pressure on nonprofits, and Congress and state legislatures will be looking to cut every penny they can.”
The economic environment for health care reform is clearly rocky for the federal government, which is adding trillions to a deficit many fear it can never repay. Add that to the fact that half a trillion dollars’ worth of planned Medicare cuts are part of the new federal approach, and investors have at least one clear starting point.
“I would be extremely careful about investing in any health care services sector or company that has significant Medicare exposure,” says Debbie Guthrie, MBA’79, Founder and CEO of Capitol Health Management Corp. in New York City. “It’s my view that Medicare reimbursement will continue to be reduced substantially over time—the economics simply do not work.”
The industry, she explains, has underlying structural problems that must be addressed.
“We should provide access to basic health care for every citizen,” she says, “and ultimately we may already have the ingredients to do that, but our delivery system has structural problems, with fragmented points of entry and reimbursement, which makes it impossible to know which Americans are getting excluded from the system and why.”
While she does support “comprehensive universal access and incremental insurance reform,” this legislation is, she says, “a mess,” adding that jealous guarding of turf by many other constituencies will make implementation, let alone cost savings, that much more difficult.
Guthrie is, not surprisingly, supportive of free market solutions in dealing with many of these problems. “I am very much a capitalist,” she says. “I believe the private sector will continue to take the lead, driving efficiency through innovation, which the government is incapable of doing. But nobody is taking a step back to understand and evaluate where the incentives should be aligned and which participants are truly delivering cost-effective health care. Everyone is protecting their turf just as everyone was looking for special deals. I don’t think anyone understands the full implications and the unintended consequences as the reform moves into the implementation phase.”
Guthrie is particularly troubled by the fact that the legislation “penalizes rather than supports specialists, which is counterproductive. If you have a cold and just need an antibiotic, you don’t really care, but if you have cancer or need heart surgery, you want to make sure you have the best physician you can get. Of course we want these specialists to keep working and have the financial incentives to do so. What’s happening now is that many of the top doctors are looking at the challenges on the horizon and are refusing to treat Medicare patients and are accelerating their retirement plans.”
Guthrie gets no argument from Dr. B. W. Ruffner, a Chattanooga oncologist who is President of the Tennessee Medical Association (TMA). “Certainly we wouldn’t come up with a public policy saying, ‘Pull out of Medicare,’ but there’s no question that some physicians are doing just that,” he says. “Concierge medicine is one option. Another is limiting your practice to commercial insurance, and yet another is retiring, and I’ve heard all three discussed.”
Ruffner cites the cuts scheduled for Medicare, which is “not self-sustaining as it is,” but says commercial insurance may have its own long-term pitfalls.
“A lot of these processes will start with Medicare, but the commercial side will quickly follow suit,” he says. “I think it already occurs when I’m negotiating contracts with Blue Cross. A lot of the metrics for those negotiations are based on Medicare, and that trend is going to take a quantum leap forward with the new exchanges, which will tend to have rules that come from Washington about what they can include and not include. Those physicians who say, ‘I’m just going to take commercial insurance and not Medicare,’ are going to find the two are converging.”
Ruffner says physicians are also wary of the legislation’s provisions for an Independent Payment Advisory Board (IPAB) appointed by the president. “Physicians are concerned that the group will be arbitrary in its efforts to control costs and that the health care industry—and this is as true of hospitals and device makers as physicians—will be affected negatively in due course,” he says.
Should IPAB feel costs are out of hand, it could arbitrarily institute cuts, which could only be overridden by a majority in the House and a 60 percent vote in the Senate. Those votes would have to be accompanied by equivalent Congressional cost-cutting.
Decisions on care, Ruffner maintains, need to remain with those who have expertise.
Our delivery system has structural problems, with fragmented points of entry and reimbursement, which makes it impossible to know which Americans are getting excluded from the system and why.
—Debbie Guthrie
“There’s no question in my mind,” he says, “that the best person to make those decisions about what’s appropriate and what’s not is a physician, but if the physicians don’t get together and work together, Uncle Sam will make that decision, and that’s what we’re seeing right now.”
If there is a positive, at least in the short term, it is directed toward one segment of physicians.
“The thing I agree with 100 percent is putting some incentives into primary care,” Ruffner says. “In Medicare, primary care payments are going to go up significantly. In Medicaid, one of the requirements is that regular office visits for Medicaid payments will be paid at the same level as Medicare. Apparently Congress recognizes the deterioration of primary care. There’s no question that if you’ve got a belly pain, costs to the health care system are a lot less if you start with a primary care doctor who knows you as opposed to going to the emergency room at 10 p.m. Building up the primary care infrastructure is a significant step in the right direction.”
Once that bottom-line relationship is nurtured, change:healthcare’s Parks hopes to contribute to an effort to tackle the problems of paying for care typified by his mother’s experience.
“What we do doesn’t fix the system, but at least it turns on a flashlight in a dark kitchen,” he says. “At least people will be able to see the table and that broken glass over there. It’s something to help you get your bearings. There are tons and tons of data out there. There are websites and booklets and pamphlets being generated all the time, but people are wondering, ‘How do I turn that into something relevant and easy to understand for one person?’ That’s the issue du jour.”
The Owen School’s Van Horn agrees that one part of the solution is going to come from the place where policy understands and intersects with personal choice. “I think that this is one small piece of generating insight into how individuals, when faced with different prices, will change their health care consumption decisions,” he says, “and that is the future of health care.
“We can’t afford to do what we’re doing now, and the reality is we’re all going to start paying more and have to make decisions based on how much things cost. From a policy perspective, understanding how consumers make those trade-offs and decisions is important.”
Any expansion of such ideas into savings across the industry will require more cooperation among parties sometimes known for their insularity. Ruffner describes one attempt:
“I would say the THA and the TMA are working very hard to cooperate with each other and to try to have a constructive dialogue about how to move forward with these things,” he says.
“It certainly doesn’t mean we agree on everything, but we recognize the importance of working together. We’re just two of several constituencies. There are the insurance companies, there’s big pharma, then there are the device makers, and each one of these is a very powerful group with a lot to lose.”
For investors, companies in any segment of the industry are going to have to prove themselves. “The companies that are going to succeed,” says Capitol’s Guthrie, “are those that have the ability to bring efficiency to the health care system, to deliver quality and free up enough money for solid patient care.”
This may be easier said than done for most, but as America’s health care system has proven time and again, those with ingenuity and determination are capable of rising to the occasion. Physicians, hospitals, pharmaceutical companies and others in the medical community have worked together before to solve some of the most challenging problems known the world over. The question now, though, is whether or not they can do the same for the very system they are a part of.