Vanderbilt Business

Category: Also Featured

  • Bob Shi, MAcc’14

    Bob Shi, MAcc’14

    The value of tech

    When a well-known technology company purchases a hot new startup, it makes news. But long before that announcement, accountants have spent hours behind the scenes evaluating the value of the company and its assets. While valuation occurs in all sorts of mergers, acquisitions and even annual tax filings, technological products and property expand the scope and complexity of corporate valuation.

    Valuation can mean anything from the value of the staff to the perception of the company’s trademarks. It can include modeling and analyzing business interests and assets, including intellectual property or customer relationships—a far cry from evaluating more tangible assets and made trickier by the topic at hand.

    Bob Shi, MAcc'14
    Bob Shi, MAcc’14

    Deloitte advisory consultant Bob Shi, MAcc’14, is becoming fluent on valuing tech assets, thanks to his work on high-profile projects. None of it, he believes, would have been possible without the one-year MAcc valuation program at Vanderbilt. His undergraduate work included combined degrees in math and economics. Owen was where everything came together.

    “The MAcc valuation program really was a nice marriage with my math and economics backgrounds,” Shi says. He interned at Deloitte in Dallas and was hired after graduation. He has worked on some of Deloitte’s key projects, including the split of HP Inc. and Hewlett Packard Enterprise, where his work focused on modeling and data analytics.

    Valuation is a challenging field in the most straightforward of circumstances, he says, and more so for tech companies because the assets are valued in a nonstandard fashion. The HP separation was made more intricate due to the added layer of valuing the intercompany relationships. Shi says the project required constant contact with his HP clients—something for which Vanderbilt prepared him well.

    “During the fall semester at Owen, we had several events with the Big Four companies, like meet-and-greets or social events or dinners. We got to know the individual firms that we’d potentially be working with,” Shi adds. “For me, coming out of an undergraduate program where I didn’t engage too much in public speaking or mingling, the first few events were a little awkward. I wasn’t entirely sure I had a handle on myself.

    “I knew if I wanted to succeed in public accounting—and this sort of valuation work—I would need to handle myself in that setting. As we spent more time with other professionals, I became more comfortable engaging them and navigating though large groups.”

    That was evident during an initial meeting at HP headquarters to meet with high-ranking executives. “Rather than being the shy new guy sitting on the computer taking notes, I was able to actively engage in conversations with them, get a feel for what they did, how we needed to treat their data and get a better grasp of what it was Deloitte would be doing for HP,” Shi says. “Without the events and the training that the MAcc program provided, I wouldn’t have had as effective a meeting, nor would I have gleaned as much information as I did.”

  • Evolving, Serving and Having Fun

    As Owen’s website says it, the approximately 40 members of the Alumni Board “serve the community through the promotion of and support for the school’s strategic priorities and initiatives.” Ask Erika King, MBA’99, the board’s new chair, and she’ll tell you that description leaves out an essential detail: “It’s fun.”

    Alumni board brainstorming
    During alumni board meetings, members divide into smaller groups and provide insight on matters concerning the school. Nancy Lea Hyer, associate dean for academic programs, facilitates one such session last fall.

    For King, who has been involved with the board since 2011, some of the enjoyment in serving comes from getting to know other alumni and comparing their experiences. “It’s fun to learn what Owen was like before I got there (it started in an old funeral home, after all), and to hear from people who came after me,” King says.

    But even more, as the board’s role has evolved, serving is not just a way to stay connected but a way to continue to shape the school. Board members, like other alumni, help recruit students, share expertise with current classes, and assist in internship and job placements. In what is a very instrumental role, the board helps shape the school’s strategic direction, Johnson says.

    The board meets on campus twice a year. At those sessions, Alumni Board members break up into small groups of four or five and, with the help of a facilitator, apply their expertise to questions that bear on Owen’s planning for the future. For example, King says, “we might talk about the future of campus-oriented education. Should Vanderbilt continue having MBAs in residence? Should we grow our health care programs? Should we have a program in technology?

    “These are things that the dean is generally pondering,” she says. “We get to bring our collective experience to bear on his thinking.”

    The advisory role for the board, King notes, is relatively new. “For the person who simply wants to check board experience on their résumé, this is not the board for them. It’s work. But we get to be consultants to our alma mater. How can that not be fun?”

  • Addicted to Travel

    Around the world in 80 days? Tyler Narveson needs only 17.

    The Colorado native, who finished his MBA in May, travels for both business and pleasure, calling his “addiction to travel” his passion. Having circumnavigated the earth five times already—at 28 years old—he was recently featured in an August Wall Street Journal article about the current popularity of round-the-world travel.

    “It was fun,” he says, “because I was doing a round-the-world trip the day it was published.”

    That trip’s first leg was to Finland, followed by Croatia, Montenegro, Albania, Georgia, Azerbaijan, Qatar, Bangladesh and China before he returned home. Using an American Airlines Explorer award, he pieced the trip together based on flights available through American’s flight alliances.

    “It was a bit much, to be honest,” he says. “It was just 2 1/2 weeks. The ones for work have usually been three to six weeks.”

    Before graduate work at Vanderbilt, Narveson worked for Accenture, a multinational consulting firm serving clients in more than 200 cities in 56 countries.

    “I did a project for the U.S. Department of State where I traveled to different embassies,” he says. “In two years, I went to 18 countries. My first round-the-world was China to Paris to Equatorial Guinea to Algeria and back. It was quite an experience.”

    Now working for health care firm DaVita and based in Nashville, he’s hoping for more travel opportunities. “One of the things I like about DaVita is that they’re expanding internationally, so there may be travel opportunities down the road,” he says.

    Narveson’s taste for travel was whetted by a study-abroad experience in Shanghai when he was an undergraduate at Colorado State University. “Studying in China was still kind of new at the time,” he says. “When I was there, no one spoke English. Now I go and everyone speaks English. The city has grown immensely.”

    That rate of change is part of what drives his wanderlust—that, and wanting to get in as many countries as possible before life’s responsibilities slow him down.

    “Originally, my goal was 50 countries by the time I was 30, but I passed that,” he says. (His current tally is 54.) “My life goal is now 100.”

    Narveson’s main recommendation for other travelers is to find the hidden gems off the beaten path.

    “Find those changing parts of the world now,” he says. “Western Europe will always be there, the Eiffel Tower will be there in 70 years, but I was just in Bangladesh, and I’m sure in 70 years, it will be drastically different.”

  • Right on Schedule

    Amelia Emmert
    Amelia Emmert

    From her perspective, there’s no such thing as a typical day for Amelia Nennstiel Emmert, MAcc’08. As an audit manager at EY Nashville, her schedule is dictated by the needs of clients, the teams she supervises, and by the tasks she plots out for herself in advance.

    There’s a certain irony in this daily uncertainty, given that Emmert’s career trajectory is right on schedule.

    Last October, Emmert became the first member of Vanderbilt’s 2008 inaugural master of accountancy class to reach the level of audit manager. Unlike her varying daily duties, her steady rise—and those of her fellow MAcc alumni—represents exactly what the program’s architects, drawing on input from top firms like EY that serve as partners, envisioned from the start.

    “Our program is designed to lay a solid career foundation upon which entry-level professionals can grow,” says Karl Hackenbrack, associate dean and director of accountancy. “Amelia’s success at EY is affirmation that Vanderbilt’s approach is paying off for our graduates and the firms that hire them.”

    Six months into the one-year program, Emmert was completing a paid internship at EY as part of her studies—a distinguishing feature of the Vanderbilt MAcc. She had a job offer before the start of Mod 4 in the spring.

    Positioned for success

    “The program did a great job of preparing me for the interview process,” Emmert says. “We received many opportunities for interaction with professionals at every level within the firm, including partners, and we were able to develop relationships with those people even before offers were extended.”

    “As first-year staff, we have set job responsibilities to some degree as key members of the audit team,” Emmert says. “You build on the internship and begin to understand more about the audit process. Second-year staff carry out similar responsibilities as a first-year employee, but with less guidance from the audit senior,” she says.

    “Seniors (in their third year with the firm) begin to take ownership of the entire engagement and become more involved in the day-to-day planning and execution of the audit. As a manager, I oversee the audit process for two of our clients and ensure the work is performed with quality and progressing as planned, even though I may not be at the client site every day. I also keep the senior manager and partner informed of our progress, and I am available to the client and the team for questions,” she says.

    The new audit manager also takes on additional mentoring responsibilities. “I now have three people in the first-year staff position which I was in five years ago to whom I provide performance management and career advice,” she says.

    Forget stereotypes

    While her responsibilities have changed considerably in five years, Emmert has found that Vanderbilt prepared her well. That was especially true in the areas of leadership and communication that, to some, might seem peripheral skills for a public accountant.

    “The MAcc program taught me to think critically and to be a well-rounded individual, someone who has technical expertise, but who also has good people skills and is known as a go-to for getting the job done,” Emmert says.

    “It also helped me polish my communication skills and learn to effectively articulate what I’m trying to say.”

  • All in the Family

    Two years ago, Jane Kennedy Greene, BA’75, MBA’81, went from being shareholder in the family business to running it when her father asked her to take over the company’s reins.

    Jane Kennedy Greene
    Greene

    With 4,000 employees and operations in 30 states and Canada, Greene has her hands full as a third-generation CEO and board chair of Kenco Group Inc. The multinational firm provides logistics services, transportation, real estate management and material handling for Fortune 500 clients like Glaxo SmithKline, Whirlpool, Green Mountain Coffee and DuPont.

    “I’ve been on a steep learning curve,” she says. “But there is a lot of personal satisfaction in working in the business my father founded with his brother-in-law 63 years ago. It’s something I grew up in and it’s exciting to be able to do my part.”

    Greene chose Owen with the idea of working at Kenco, perhaps in marketing. But after she earned her MBA, a job offer lured her to New York City, where she built a career in the fast-paced world of advertising. She married Owen classmate, Greg Greene, MBA’81, and they moved to Dallas. It was shortly after their oldest child graduated from Vanderbilt that Greene’s father approached her to step in as board chair and CEO.

    “It was good timing,” she says. “My nest was emptying and I had time to give. While many of my friends are now looking toward working less, I’m actually gearing up. It’s my next chapter.”

    Her leadership earns Kenco the distinction of being the largest woman-owned business of its kind in the nation, a certification the Owen Alumni Board member worked hard to obtain.

    “That is a great source of pride,” she says. “To be able to build on the past successes of my father, brother and other family members is important to me. Now with the woman-owned certification, I am bringing my own contributions and adding to the Kenco legacy.”

  • Restoring Music History…Again

    Restoring Music History…Again

    Steve Buchanan may be the only Owen graduate responsible for saving music history twice.

    As general manager of the Ryman Auditorium in downtown Nashville, revered as the Mother Church of Country Music, Buchanan oversaw the building’s million dollar renovation and reinstatement as one of the world’s premiere music venues.

    Flood waters at the Opry stage door, May 3, 2010
    Flood waters at the Opry stage door, May 3, 2010

    On May 2, 2010, the momentous flood that destroyed parts of Nashville also devastated the Grand Ole Opry House at Opryland in Donelson, the home to the Grand Ole Opry since the 1970s. In the hours when floodwaters entered the building and rose, Buchanan and a team of 10-15 workers courage-ously stayed in the flood zone to protect and preserve instruments, historic recordings and other artifacts by moving them to safety. Even so, not everything could be saved.

    When the rain stopped, the ground floor of the 4,400-seat Opry house was covered with muddy water up to its back four rows. Forty-six inches of water covered the stage. Almost everything would need to be replaced: seats, retail store, lobby, dressing rooms, green room, control booth, stage, stage curtains and rigging, along with the mechanical and power systems.

    Buchanan once again found himself charged with restoring another cherished building. “It breaks your heart, but it’s our responsibility to be sure that that building comes back to life, and it will,” Buchanan told USA Today.

    In addition to overseeing the physical renovation of the building, Buchanan immediately hired restorers, conservators and luthiers (specialists in string instruments) to care for the historic artifacts, photos, tapes, costumes and instruments impacted by flood damage.

    “After the flood waters receded, Steve led the recovery of the property—literally and figuratively,” noted Dave Kloeppel, BS’91, MBA’96, former president and COO of Gaylord Entertainment Company. “Importantly, Steve insisted the Opry never miss a show—and it didn’t. Using venues all over Nashville, the Opry never missed a beat.”

    Steve Buchanan on set of Nashville series. (John Russell/Vanderbilt University)

    Five short months later, Buchanan and the cast of the Grand Ole Opry stood on a new stage in a renovated Opry House and welcomed audiences back with a celebration dubbed “Country Comes Home.” Backstage, performers marveled over 17 dressing rooms, facilities, instrument lockers and a comfortable, cheery green room that featured a new artifact—a marker showing how high the waters reached in the historic flood.

    In recognition of his resilience, courage and dedication to excellence, Owen honored Buchanan with the school’s inaugural Distinguished Service Award at Owen’s annual alumni dinner in 2012.

  • Long-Term Bet

    Kaseff
    Kaseff

    Twenty years can create some distance between a university and one of its graduates. Not so for Kevin Kaseff. A member of the Class of 1989, Kaseff fondly recalls both the friends he made at Owen and his academic experience. “I loved the school and the experience,” he says. “I’ve maintained those friendships the past 20 years.”

    Even though Owen offered no real estate courses at the time, Kaseff credits the school with putting him on the fast track in his real estate career. Today he is the Co-founder and Managing Partner of Titan Real Estate Investment Group Inc., a national commercial real estate investment firm with offices both in Southern California and on the East Coast.

    “My career success can be directly attributed to my time at Owen,” he says. “I chose to pursue an MBA because I had reached a point where I felt I was stagnating in my career, and I wanted new challenges.”

    The contrast between his studies at Owen and his work in Los Angeles—one of the nation’s most dynamic real estate markets—provides the businessman with an interesting perspective.

    “My view of the financial world was a 45-degree angle, and I wanted the full 180-degree perspective,” he recalls of his academic career. “And clearly, Owen did that for me. Investing in real estate is about making long-term bets. These are not liquid assets, so having an MBA and knowledge of the financial markets, operations, accounting and human resources is critical.”

    A native of the San Francisco area, Kaseff says he is moderately familiar with the Middle Tennessee commercial real estate market. “We recently sold several apartment complexes in the Nashville area,” he says. “Nashville is a strong warehouse distribution market but a relatively small office market.”

    The broader issues and trends facing the commercial real estate industry, Kaseff says, are those most businesses must address: re-duced demand and a lack of credit. As to Titan specifically, the company is stable. “We are fortunate during this capital markets meltdown that our properties are well-leased,” Kaseff says. “We have avoided using high leverage and have been fairly conservative in our underwriting.”

    Kaseff foresees a redefining of an industry that has taken a bruising with the country’s economic slump. “As we come out of this recession,” he says, “there will be more of an emphasis on knowing real estate operations from leasing and management and less on pure financial engineering.”

    As for Owen and its own long-term bet in a real estate program, Kaseff is optimistic. “There are only a few graduate business programs around the country that have a real estate focus,” he says. “I believe that Owen can compete to attract students with this emphasis. We need more Owen alums in our industry.”

  • Seeds to Sow

    Professor Germain Böer and I have much in common. We both arrived at Owen in the same year, we both have practiced accounting, and we both are serial entrepreneurs. This last item is a shared passion of ours. Whether starting his own business before coming to Owen or launching the Center for Entrepreneurship at the school, Germain has always been a champion for those interested in taking a different career path and pursuing the challenge of being an entrepreneur.

    Not only have his efforts created careers for Owen students, their startups have created hundreds of jobs for others. Many Owen students and alumni have benefited from the education and experience Germain has provided for the past 30 years. I continue to benefit from Germain’s expertise, and I hear firsthand from students about the impact he continues to have, especially from the students he refers to me for advice on being an entrepreneur.

    Hall
    Hall

    For all that Germain has given to Owen, it is time for the Owen community to give something back. I am leading fundraising efforts to endow the Germain Böer Seed Scholarship in Entrepreneurship. The inclusion of the word “seed” in the name is important. Most entrepreneurs receive seed funding to launch their ventures. It is up to them to take that seed funding and create enough value to raise the next round of funding. This scholarship, I hope, will provide the seed funding to launch the career of the next Owen entrepreneur. Please join me in making a contribution.

    Our goal is to raise enough funds to generate an annual scholarship grant of $5,000 to an Owen student interested in entrepreneurship. While a $100,000 bequest has already been committed, the scholarship requires a minimum of $100,000 in outright gifts to become active. To date, we have more than $33,000 in outright gifts pledged. Ideally we would like the scholarship fund to grow through continued contributions and earnings so we can increase the scholarship grant or provide more seed scholarships to Owen students.

    The giving levels listed below are already in existence through the Owen Circle, but gifts of all sizes are welcome. Your gift can be in many forms, including cash, securities and planned gifts. There are also ways to honor the legacy of your name within the named scholarship for Germain Böer. If you’d like to make a larger named gift, please contact Marshall Turnbull, Director of Alumni Relations, at (615) 322-9997 or marshall.turnbull@vanderbilt.edu.

    The Owen Circle Levels of Giving
    $25,000 + — Cornelius Vanderbilt Level
    $10,000–$24,999 — Chancellor’s Council
    $5,000–$9,999 — Dean’s List
    $1,000–$4,999 — Owen Associates

    I hope that you will choose to unite with me so that the legacy of Germain’s impact may continue. Thank you for considering this opportunity.

  • Even Eighths Seemed Odd

    Christie discovered artificially high profits at NASDAQ during the early ’90s.

    Bill Christie, Frances Hampton Currey Professor of Management, was just a junior faculty member at the Owen School in the early ’90s when he and Paul Schultz, a colleague at Ohio State University, stumbled across some data that pointed toward collusion among market makers at NASDAQ.

    Christie and Schultz discovered that the majority of the largest and most active NASDAQ stocks were quoted almost exclusively in even eighths, implying a spread of at least a quarter dollar. Unable to find an economic rationale for the exclusive use of even eighths, Christie and Schultz concluded that the use of even eighths was not a function of economic factors but “tacit collusion” among market makers. The artificially high profits, they surmised, disadvantaged investors to the benefit of market makers.

    News of the findings was made public in May 1994 and published in the December 1994 Journal of Finance. The amiable relationship between NASDAQ and Owen, nurtured by Financial Markets Research Center Director Hans Stoll, “came to a crashing halt,” Christie remembers.

    Stoll, returning from an overseas trip, found an angry telephone message from former NASDAQ CEO Joe Hardiman. “He called me and said, ‘Hans, what do you mean, collusion?’ I explained to him, ‘It’s implicit collusion. It’s an economist’s term.’ He was angry and concerned.” And for a period of time NASDAQ’s participation in the FMRC was severed.

    Christie’s theories, however, did prevail, creating lasting change at the company. NASDAQ has since rejoined the FMRC, and Christie was even invited to serve on the company’s economic advisory board. He still marvels that no one else had systematically looked at the raw data before a couple of upstart, untenured faculty members.

    “I continue to think that in the end, their market benefited. If we didn’t find it, someone was going to find it. Once they came out the back end of it, they came out a lot more agile, a lot more competitive. They had flexibility to do things they wouldn’t have been able to do under the old structure,” Christie says.

    The SEC subsequently has introduced new order handling rules, increasing the level of competition in the system. Investors are now able to compete directly with the dealer when placing buy or sell orders.

    “My take on this is that NASDAQ really needed some kind of external intervention. In the end they had the power to go through and restructure and do things to help them be more competitive. That’s part of what allowed them to succeed,” Christie says.

    In his file cabinet Christie still keeps a Forbes cover story from 1993 portraying NASDAQ as greedy fat cats taking investors to the cleaners. That article mentioned previous work by Christie showing that sharp reductions in a stock’s spread resulted from a firm moving from NASDAQ to another exchange. A study by Stoll also was cited in the article.

    Fast forward to January 2009, and the same magazine was recognizing NASDAQ OMX Group as its “Company of the Year” for its flexibility in managing through the current economic turbulence. An accompanying story, which refers to Christie’s research, suggests the possibility that shrinking spreads may have led Bernie Madoff and others to explore other ways to make money. Madoff has been charged in an elaborate Ponzi scheme.

    With the latest Forbes article tucked away in his file cabinet, Christie has returned once again to the quiet academia he claims to prefer, although his life at Owen is anything but staid. He served as Dean of the Owen School from 2000 to 2004. He also has continued his teaching and research, receiving numerous awards for both.

    “I don’t mind being kind of quiet in the background and thinking that maybe what we did triggered a change in the end,” Christie says.

  • An Eye for Enterprise

    Germain Böer
    Böer has helped many students launch their own businesses.

    Böer has helped many students launch their own businesses.

    Are entrepreneurs born or made? Professor of Management Germain Böer believes it’s a bit of both. On the one hand, he says, “You have to know how to reach your customers, how to build an operation that works smoothly. These are things that many people who start companies don’t really know. That’s why, for entrepreneurs, we have to have a very strong program in general business. My thesis is that entrepreneurs who get a good MBA degree have a much lower business failure rate than those who don’t.”

    On the other hand, he says, “A lot of entrepreneurship is an attitude more than a set of skills you pick up. The non-entrepreneur will look at the problems with starting a business, while the entrepreneur looks at the opportunities.”

    Right now, Böer insists, is actually a great time to start a business. “I know a guy who is buying mortgages on the cheap, culling the bad and reselling the rest. That’s the way entrepreneurs think. I don’t so much teach these qualities as observe them in successful entrepreneurs.”

    What he does provide, along with the business skills that entrepreneurs need, is abundant opportunities for students at Owen to network with successful entrepreneurs. Along with pairing students with local entrepreneurs for projects—like the one that connected Tom Ryan to the slot-machine maker—Böer regularly invites entrepreneurs to his classroom.

    “You bring in people who have been successful in businesses that the students may not have heard of, or who take an unusual approach to the way they look at business and solve problems creatively, and it stretches students’ minds. It helps them see that they can go out and do something, too.”

    Three times a year, Böer invites area entrepreneurs from a variety of industries to networking breakfasts at Owen, where they can connect with each other (and with students). “That’s how you get entrepreneurial activity started,” he says. Among the companies that have attended are Video Gaming Technologies, Avenue Bank, CareHere LLC, Edison Automation and Pharm MD, just to name a few.

    Böer also helped launch and sustain the Nashville Capital Network, which connects investors to people with promising ideas for startup businesses. Each semester two Owen students serve the organization, meeting with investors and helping entrepreneurs sharpen their business plans. The experience, Böer says, is invaluable: “When they graduate, these students can go to work in private equity firms without much trouble.”

    He also helps students launch their own businesses. He can tick off a list of business ventures in which current MBA students are involved—from doggie daycare to insurance products for pro sports figures to tire recycling in Dubai.

    Operating a business, Böer says, helps students think about how everything fits together. “They learn a lot about self-reliance and how to solve problems. It builds their confidence.”

    In all these ways Böer has worked to build a culture at Owen that literally encourages entrepreneurism. “In our society,” he says, “the only way you can become wealthy is to make lots of people better off than they were before.” (Think of the personal computing industry.) You’re not just making money; you’re making a contribution to society. So I’m always telling people, ‘Go out and get rich.’”

  • In a Tailspin?

    In a Tailspin?

    InATailspinMichael Lapré, an Owen faculty member who studies operations and performance in the airline industry, sees many challenges ahead for the major airlines. Maintaining customer satisfaction will continue to be a problem, he predicts, as fuel costs continue to soar and the industry works to keep costs down.

    “Right now the biggest issue is cost,” says Lapré, the E. Bronson Ingram Associate Professor in Operations Management. “They need to figure out an appropriate cost structure that makes it at least appealing to compete with an airline like Southwest. That’s not easy. You want to pay your employees appropriately. But that’s tough because other airlines, the discount airlines, have much cheaper labor. Then there are fuel costs, and figuring out how many different types of planes you can profitably have in the fleet. So there are cost-structure issues, fleet issues, labor issues. It’s not easy.”

    Indeed, the airline industry today is facing a triple threat from rising costs, customer dissatisfaction, and an aging air-traffic control system, spurring some industry analysts to compare the current environment to the post-9/11 era of bankruptcy filings and extreme belt-tightening.

    While US Airways CEO Doug Parker and others see mergers and acquisitions as an inevitable mechanism for airlines to consolidate costs, it is well known that mergers create problems, at least for the short term, and can create customer dissatisfaction.

    “There are going to be more mergers,” Lapré says. “I do know that mergers and acquisitions can be troublesome. For example, the two airlines’ information systems can have trouble communicating. It takes a long time to integrate the information systems. It’s actually much easier to start from scratch than patch different types of systems together.”

    Within the next few years, the number of major carriers in the United States will be reduced from the current six—US Airways, Delta, American, Northwest, United and Continental—to four and perhaps fewer, he predicts.

    Within the next few years, the number of major carriers in the United States will be reduced from the current six—US Airways, Delta, American, Northwest, United and Continental—to four and perhaps fewer, he predicts.

    Lapré, the author of an award-winning paper on performance improvement paths in the U.S. airline industry, focuses his current research on longitudinal data from the industry—data he says is easier to procure than in some other areas of business because the airline industry is so tightly regulated.

    “I am focusing on the lessons learned about what worked well,” he explains. “I have found that you really must start with quality first. If you start cutting costs and don’t pay attention to quality, it’s going to be detrimental in the long run.”

    Lapré says it’s hard to predict when flying may become more pleasurable and profitable again.

    “Security issues are going to make flying a bit of a hassle. And now airlines are playing with charging for baggage. The so-called legacy airlines—those formed before the current era of discount carriers—began their operations in an era when oil was much cheaper and costs were less of an issue. Discount carriers, on the other hand, started from a cost-control position, so they can afford not to trim such services.

    “Discount carriers are at an advantage because they turn the plane around so quickly on the ground,” he says.

    But even discount carriers experience delays due to the antiquated air-traffic control system. “I think the industry is waiting for some technological advances that will make it easier for more planes to be in the air. Right now it’s almost full in the air. It’s too congested.”

    Lapré repeatedly returns to the linchpin that will make or break an airline: quality.

    “No airline can forget about quality. And that just means doing the basic things right and making sure customers are happy. Satisfied customers can become loyal customers, who will keep coming back.”