feature

The Next Generation of Enterprise

On the day of the NVC finals in May, David Rabie, ’15, and his team stood in front of a panel of judges in a Booth classroom and passed out samples of Thai chicken curry, quinoa, and ginger soy broccoli. The meals had been cooked in a futuristic countertop device—similar to a crockpot—called Maestro. Rabie’s vision of simple, healthy meals calls for customers to pop pods of raw vacuum-sealed vegetables, grains, and proteins into the machine and scan the QR-coded cooking instructions on the package. In a half hour, a well-rounded meal is ready to go. The judges tossed out plenty of questions: How did Rabie plan to grow the company? Who would develop the recipes? Rabie had answers, which is why the judges awarded Maestro first place in the Edward L. Kaplan, ’71, New Venture Challenge (NVC), Booth’s signature startup program. With a cash prize of $70,000, business services, and enviable industry connections, Maestro has a good start in life. Four months later, the start up is fine-tuning the product, building a

feature

The Survivor

José Antonio Álvarez, ’96 (EXP-1), has seen some of banking’s darkest hours. He was elevated to CEO of Madrid-based Banco Santander a year ago—with Europe still struggling to climb out of an economic malaise and the Greek debt crisis threatening to destabilize the fragile eurozone. Álvarez had been through worse. He was named CFO of the bank 10 years earlier, as the housing bubble was about to peak, then burst, hobbling highly leveraged US and European banks. Yet Santander emerged as Europe’s seventh largest bank, with assets of more than $1.5 trillion. Of course Santander was by no means immune to the crisis that engulfed Europe and its banks, with Spain’s overleveraged construction industry contributing to the frenzy. “The worst was summer 2012,” Álvarez said. It’s when Spain was downgraded by the three major ratings agencies, “a few notches in one shot” from Fitch, Moody’s, and Standard and Poor’s. However, through it all, Santander never posted a quarterly loss, unlike many of its European peers, including BNP Paribas, Crédit Agricole Group, and Deutsche Bank. Royal Bank of Scotland suffered such steep

feature

A Bowl of Cashews

Sometimes you feel like a nut; sometimes you don’t. And sometimes you wish you didn’t have to decide. A quiet revolution in economic thinking instigated by Richard H. Thaler traces its beginnings to a dinner party he hosted in the 1970s. As Thaler explains in his latest book, Misbehaving: The Making of Behavioral Economics, the guests while waiting with cocktails for the meal, were devouring the cashews—the entire bowl half-eaten in minutes. So Thaler, worried that his guests would fill up on the salty snacks, whisked the bowl away. He recalled that when he came back, his friends thanked him for it (and found themselves with room to enjoy a big dinner). “But then, since we were economics graduate students,” Thaler recalled, “we immediately started analyzing this. Because that’s what economists do.” Even cashews could hold the key to unlocking insights about our idiosyncratic behaviors. Without the temptation of the nuts, he said, “We realized that a.) we were happy, and b.) we weren’t allowed to be happy, because a first principle of economics is more choices are better than fewer choices.”

feature

Of Like Minds in the C-Suite

When an organization’s CEO and CFO both hail from Booth, there’s a common methodology to problem solving that cuts to the chase. In a fast-moving environment, according to Byron David Trott, AB ’81, MBA,’82, founder, chairman, and CEO of BDT & Company, applying “the same disciplined approach” as his Booth-trained CFO Mike Burns, ’03, speeds decision making and removes unnecessary drama from the equation. This doesn’t mean that they always agree—far from it. Maria Kim, ’12 (XP-81), CEO of Chicago-based the Cara Program, describes her CFO Carla Denison-Bickett, ’04, as “a healthy agitator.” But in many ways, the open debate leads to increased dynamism that infects the entire leadership team. At BDT & Company in Chicago and Oaktree Capital Management in Los Angeles, the CFOs were the first and most significant external hires by the founding CEOs—and the pairs are still together. At Oaktree, it’s been 20 years as a team for CEO Howard Marks, ’69, and David Kirchheimer, ’78. Kim and Denison-Bickett have led nonprofit the Cara Program for the past year, but previously worked at the organization

conversation

The Colombia Conversation

Juan Esteban Calle Restrepo, ’94, heads Medellín-based EPM, the largest public multi-utility company in Colombia. Calle recently discussed the economic prospects for Colombia and Latin America with Santiago Umaschi, ’11, managing partner of a Boston-based strategy consulting firm that specializes in international markets. Umaschi works with a nonprofit arm of EPM that helps small and midsize companies in Medellín find export markets. Umaschi reached out to Calle on a visit earlier this year— the two met for the first time over coffee, and talked about the city’s prospects. They continued the conversation in a summer phone call. Umaschi: I commute from Boston to Medellín from Boston twice a month, and I find the geography to be striking. With the Andes all around you, you’re surrounded by a wall of green. At first I was a little claustrophobic, but then the city grows on you. The people are proud of their city. The metro cannot be cleaner. If you call the car service for a 5 a.m. pickup,

perspective

Craig Bouchard, '81

I spent nearly 20 years in banking. I was lucky having been chosen for the First Scholar Program at First Chicago. Every six months I chose a rotation and a new boss. I was a sponge. Landing in television, newspapers, and movie finance, the bank gave me a very high lending limit. We did a lot of deals. I was 23 at the time. Young bankers don’t have enough responsibility today. I learned the importance of making zero mistakes. Set the leadership bar really high and jump over it. They will follow you. I never had a sales job. Instead, I’ve been a risk manager much of my career. I think about business like this: How do you reduce the risk? Eliminate all the risk and you reach nirvana. A business is fascinating in its first few years. Knowing most start-ups don’t survive, you live on the edge. You find out how good you really are. My handshake is my contract. Old fashioned, you might be thinking. Wrong. If people trust you, it’s powerful. Trust and ethics create an oasis of opportunity. When I submitted our $525 million bid to purchase Real Alloy in March, the company’s CEO trusted me to get to the finish

perspective

Chandra Greer,'90

Style: I wear sneakers with just about everything—suits, dresses, and skirts. They’re easy, casual, and stylish. Plus, I have two kids and run a retail store, so I’m on my feet a lot. These, from Italy, have a particularly graceful, bohemian, beat-up luxury that elevates sneakers to an art form. Travel: I was last in Namibia in the spring of 2014, and it’s an experience I will treasure always. This is a land of extraordinary physical contrasts—other-planet-like sand dunes, sweeping coastal views, and low, lush mountains. The Himba women there, in the way they coat their hair and skin with a paste of red ochre, are striking and beautiful. Art: Henry Darger Henry Darger was the ultimate outsider artist, iconoclastic and super private. I first became aware of him because he lived in a boardinghouse across the street from where I used to live in Chicago. When he died, in the early '70s, his landlord found a bunch of huge murals and a giant illustrated book. He did all of his artwork just for himself, and now it’s extremely valuable. I’m really drawn to that internal expression because it’s

In this issue
feature

The Survivor

José Antonio Álvarez, ’96 (EXP-1), has seen some of banking’s darkest hours. He was elevated to CEO of Madrid-based Banco Santander a year ago—with Europe still struggling to climb out of an economic malaise and the Greek debt crisis threatening to destabilize the fragile eurozone. Álvarez had been through worse. He was named CFO of the bank 10 years earlier, as the housing bubble was about to peak, then burst, hobbling highly leveraged US and European banks. Yet Santander emerged as Europe’s seventh largest bank, with assets of more than $1.5 trillion. Of course Santander was by no means immune to the crisis that engulfed Europe and its banks, with Spain’s overleveraged construction industry contributing to the frenzy. “The worst was summer 2012,” Álvarez said. It’s when Spain was downgraded by the three major ratings agencies, “a few notches in one shot” from Fitch, Moody’s, and Standard and Poor’s. However, through it all, Santander never posted a quarterly loss, unlike many of its European peers, including BNP Paribas, Crédit Agricole Group, and Deutsche Bank. Royal Bank of Scotland suffered such steep

feature

A Bowl of Cashews

Sometimes you feel like a nut; sometimes you don’t. And sometimes you wish you didn’t have to decide. A quiet revolution in economic thinking instigated by Richard H. Thaler traces its beginnings to a dinner party he hosted in the 1970s. As Thaler explains in his latest book, Misbehaving: The Making of Behavioral Economics, the guests while waiting with cocktails for the meal, were devouring the cashews—the entire bowl half-eaten in minutes. So Thaler, worried that his guests would fill up on the salty snacks, whisked the bowl away. He recalled that when he came back, his friends thanked him for it (and found themselves with room to enjoy a big dinner). “But then, since we were economics graduate students,” Thaler recalled, “we immediately started analyzing this. Because that’s what economists do.” Even cashews could hold the key to unlocking insights about our idiosyncratic behaviors. Without the temptation of the nuts, he said, “We realized that a.) we were happy, and b.) we weren’t allowed to be happy, because a first principle of economics is more choices are better than fewer choices.”

feature

Of Like Minds in the C-Suite

When an organization’s CEO and CFO both hail from Booth, there’s a common methodology to problem solving that cuts to the chase. In a fast-moving environment, according to Byron David Trott, AB ’81, MBA,’82, founder, chairman, and CEO of BDT & Company, applying “the same disciplined approach” as his Booth-trained CFO Mike Burns, ’03, speeds decision making and removes unnecessary drama from the equation. This doesn’t mean that they always agree—far from it. Maria Kim, ’12 (XP-81), CEO of Chicago-based the Cara Program, describes her CFO Carla Denison-Bickett, ’04, as “a healthy agitator.” But in many ways, the open debate leads to increased dynamism that infects the entire leadership team. At BDT & Company in Chicago and Oaktree Capital Management in Los Angeles, the CFOs were the first and most significant external hires by the founding CEOs—and the pairs are still together. At Oaktree, it’s been 20 years as a team for CEO Howard Marks, ’69, and David Kirchheimer, ’78. Kim and Denison-Bickett have led nonprofit the Cara Program for the past year, but previously worked at the organization

perspectives

Are You Convinced?

Picture a salesman. I won’t take it personally if you’ve conjured an image of a slick talker hawking a used car or an overly enthusiastic promoter of super-absorbent towels. As a middle-market lender here in Chicago, I sell, or more accurately, rent money. It may not be the stereotypical form of sales, but make no mistake: I am a salesman. When I started at Booth in 2014, I was an experienced banker who had just transitioned into a sales role. Several current and former students highly recommended professor Craig Wortmann’s Entrepreneurial Selling class. During the first session, Wortmann asked, “What word comes to mind when you hear the term salesman?” I’m cognizant of public perception of sales, so I expected some degree of negativity. Even so, I was surprised by the results. The most common response was “pushy.” Others included “manipulative,” “sleazy,” “aggressive,” “slimy,” and “annoying.” There were a few suggestions of “persistent” and “confident,” but those were by far the minority.

perspectives

Ariel Tiger, '10

With excellent rates on payroll and health insurance services, stylish interiors, and bento box lunches, New York– based WeWork is fast becoming the dream office environment for those not particularly inclined to office environments, including freelancers, start-ups, and small businesses. Chief administrative officer Ariel Tiger, ’10, oversees financial and legal matters, culture, and community growth for the company, which has 48 coworking spaces in 16 cities worldwide. Tiger’s day is a flurry of activity capped off by brainstorming with colleagues late into the night. He takes us through a typical Monday. 6:30 AM Wake up and spend time feeding and playing with my 18-month-old son, Jonathan. There is nothing better than early morning father-son quality time. 7:30 AM Check news, stocks, and, of course, my email. WeWork has operations around the globe and is expanding further internationally, so the company never sleeps. 8:40 AM Walk to our new HQ. We moved from the financial district to Chelsea because we outgrew our offices when our team doubled in size in the first half of 2015.

perspectives

Craig Bouchard, '81

I spent nearly 20 years in banking. I was lucky having been chosen for the First Scholar Program at First Chicago. Every six months I chose a rotation and a new boss. I was a sponge. Landing in television, newspapers, and movie finance, the bank gave me a very high lending limit. We did a lot of deals. I was 23 at the time. Young bankers don’t have enough responsibility today. I learned the importance of making zero mistakes. Set the leadership bar really high and jump over it. They will follow you. I never had a sales job. Instead, I’ve been a risk manager much of my career. I think about business like this: How do you reduce the risk? Eliminate all the risk and you reach nirvana. A business is fascinating in its first few years. Knowing most start-ups don’t survive, you live on the edge. You find out how good you really are. My handshake is my contract. Old fashioned, you might be thinking. Wrong. If people trust you, it’s powerful. Trust and ethics create an oasis of opportunity. When I submitted our $525 million bid to purchase Real Alloy in March, the company’s CEO trusted me to get to the finish

perspectives

A World of Growth for Small Businesses

I discovered Grow Movement shortly after business school. I was seeking to volunteer as a mentor and contribute toward developing economies. Grow enabled me to use knowledge gained from Booth along with my professional experience. Having worked in private equity [Goldman Sachs, Merrill Lynch], I had some idea about the attributes of successful entrepreneurs and the elements needed to build a business. After studying several proposals, I decided to work with Martial Batangana, a 24-year-old entrepreneur in Rwanda. His ambition was to build a mobile platform that would provide agricultural advice to local farmers and connect them with regional buyers. Batangana was highly motivated and technically savvy, but I saw that his business needed a framework—it was a matter of planning activities and organizing resources. For six months, I spent two to four hours a week, often on a weekday evening or a Sunday afternoon, communicating with him via email and Skype. Through his deep local and industrysector knowledge, he had identified a need in his home country. I drew on my knowledge of marketing,

conversations

Where’s the Optimal Place to Park a Food Truck?

Pursuing a love of food and cooking, I completed the basic pastry certificate at Le Cordon Bleu in Paris the summer before starting the PhD program. So I was thrilled to see a crêpe truck, Paris Ouh La La, serving lunch during the school year. After several good meals at the food trucks on Ellis Avenue, and observing the variation in the trucks parked each day, I started thinking about how the trucks decide where to park. Where you choose to locate a business is a fundamental economic question—one that food trucks must re-answer every day. The classic location choice model was offered by the mathematician and economist Harold Hotelling in 1929. Consider two ice cream vendors who parked their carts on a one-mile stretch of beach. Assuming the venders offer roughly the same treats, beachgoers will naturally choose to walk to the closest cart. The vendor on the left will serve all the beachgoers to its left, and the vendor on the right will serve all the beachgoers to its right.

conversations

Power Sources

The Challenge: In 1999, Ted Brandt cofounded Marathon Capital in Bannockburn, Illinois, a $25 million investment bank focused on renewable energy. The original compensation structure hewed to the industry norm of a steady balance between salary and bonus, based on both individual and company performance. But in the first several years, Marathon was short of capital and the model was unsustainable. How could the company devise a system of incentives while maintaining the necessary cash flow to sustain the business, Brandt wondered. The Strategy: For the next three years, Marathon slashed salaries and paid bankers big bonuses when deals closed. Revenues grew, but that led to new challenges. This “eat-what-you-kill” model, as Brandt calls it, discouraged teamwork and was unfair to younger bankers who had no say in what projects to join. Also, by paying out bonuses before fixed costs, Marathon had few profits. Compensation ran about 90 to 95 percent of revenues. In comparison, similar banks

conversations

Big Marketers on Campus

Is it possible to geotarget advertising messages by street address? How can business-to-business marketers get better data? Why are millennials spending buckets of money on jewelry? These were among the intriguing queries tackled at Kilts Marketing Day, an annual forum sponsored by the Kilts Center for Marketing. The event brought 16 executive-level alumni in marketing to Harper Center in April to share their industry experience and expertise. Each alumnus hosted a table and led a 30-minute discussion on the latest developments in big data, business-tobusiness marketing, and product innovation. The 100 student attendees—aspiring marketers and those interested in learning more about the field—divided among the 16 tables and rotated for the second session. For the students, the opportunity is extraordinary—joining in discussions, and posing questions directly to alumni in senior positions at marketing heavyweights including JPMorgan Chase & Co., McDonald’s Corp., and MasterCard Inc. For alumni, it’s an opportunity to reconnect with Booth and engage with students. The forum showcases the range of career paths and functions available to students with an interest in marketing—not just consumer products but banking and finance, manufacturing, entertainment, retailing, and technology. Lee Ettleman, a Full-Time student, was interested in the analysis of consumer spending offered by

conversations

I'm No Dr. Love

Marketing is often perceived as being about slick advertising campaigns. To me, marketing is about running a business, a profit and loss account. I start the course by asking students, “If you are running a company and your market share drops, what will you do to fix it?” Students give all kinds of answers to my introductory market share question—they’ll cut prices, innovate, run a sales promotion. I wait until someone says, “We need to figure out what happened.” Unless you get at the underlying cause, you can’t find the solution. I teach from the perspective of presenting the strategic aspects of decision making that are intrinsically linked with marketing. This includes setting an objective for a brand, understanding where customer opportunities lie, and positioning yourself to give your target a reason to buy your product. I call that “the right to win.”<br/>The Framework<br/>I give my students a robust tool kit that enables them to look at any business problem and dissect it. I want my students to be the ones people turn to in meetings because they have something of value to