UCLA Anderson School of Management Blog

John E. Anderson, 1917 - 2011

Moments ago, UCLA Anderson Dean Judy Olian released the following message to the Anderson community:

Dear Friends,

It is with profound sadness that I share news of the passing this morning of John E. Anderson ('40). John was a leading figure in the California business community and a giant in the life of our school, which was named the John E. Anderson Graduate School of Management in his honor in 1987. John would have been 94 in September.

John's gifts to others were innumerable, sharing his wisdom, time, leadership talents and financial support. John attended UCLA on a hockey scholarship, graduating in 1940 with a B.S. in business administration. He earned an MBA from the Harvard Business School and a law degree from the Loyola University School of Law in Los Angeles. Until his passing, he was president of Topa Equities, Ltd., which owns and operates more than 33 businesses involved in agriculture, insurance, real estate, wholesale beverage distribution and automotive dealerships. John loved doing business and had a remarkable work ethic. He was at the Topa offices just yesterday.

John was the first and long-term chairman of UCLA Anderson's Board of Visitors and was the first recipient of the Distinguished Alumnus Award at UCLA Anderson in 2002 -- an award that bears his name. He was presented with the UCLA Medal in 1995, the university's highest honor. John served in leadership roles and received numerous other honors across the community. He cared about many causes and institutions. Most recently, as a result of a generous gift, Children's Hospital Los Angeles dedicated the Marion and John E. Anderson Pavilion.

John credited his Minnesota upbringing, and the lessons and values he learned while attending UCLA, for his success in business and community life. Giving back to the school was his way of enabling future generations to have the kind of opportunities that UCLA offered him. He considered it simply 'doing the right thing,' a motto he lived by. His $15 million gift in 1987 laid the foundation of excellence for the school; this year, he and Marion donated another $25 million.

Our history, built over 75 years, owes so much to John's leadership, engagement, contagious enthusiasm, bold vision and longtime support. And until recently, many of us were able to enjoy his good humor and astute advice as we chatted with him during his almost daily brisk walks through the campus.

John adored his family, and they adored him. Our heart goes out to Marion, his wife of 44 years, and to his children, Sue, Judy, John and Bill, 15 grandchildren and 13 great-grandchildren, for their very sad loss.

I absolutely cherished my time with John for his remarkable stories, wise counsel, inviolate principles and innate gentleness. John did such good things for so many. He will be profoundly missed.

Judy Olian, Dean & John E. Anderson Chair in Management

Stigmas Continue to Hinder The Unemployed

A few months ago, we blogged about the work of Associate Professor Margaret Shih, whose working paper laid out the dilemmas facing the unemployed as the look to get back to work. She told our blog: 

"What we found, is that stigmas override objective data. The unemployed are seen as less competent than those who are employed. There is a tendency to blame people for their misfortunes."

One of Shih's co-authors on that working paper is UCLA Anderson Ph.D student Geoffrey Ho ('13), whose research interests include the implicit cognitive and motivational influences on interpersonal and social hierarchies in organizations. He also has a stream of research exploring embodied organizational cognition.

Shih and Ho's work continues to resonate, particularly in state's such as Florida, where St. Petersburg Times staff writer Jeff Harrington notes that ""out of nearly 1 million Floridians counted as unemployed, about 33.7 percent have been looking for at least a year, the seventh-highest percentage among all states." Harrington's statistics (he notes) come from a Wall Street Journal analysis. Harrington also references Shih and Ho's study, writing "employers were predisposed against unemployed job seekers regardless of other circumstances. The bias held even if candidates had similar skill sets as their employed counterparts and no signs of problems in a previous job.

Harrington looked to Ho for comment:

"We were surprised to find that, all things being equal, unemployed applicants were viewed as less competent, warm and hireable than employed individuals." Why a person left their prior job made no difference. "Job candidates who said they voluntarily left a position faced the same stigma as candidates who said they had been laid off or terminated."

As the unemployment rate continues to hover near 10%, the work of Shih and Ho (and their colleague Anderson MBA student Daniel Walters ['11]) will remain relevant, as those who are unemployed  look for work. Shih said in April that the unemployed should try to avoid being labeled as such, suggesting they take classes or go back to school while between jobs, anything to look active and proactive in the eyes of potential future employers.

 

UCLA Anderson Presents: "Leaders On Leadership" -- POM Wonderful's Lynda Resnick

 

In the third installment of the Leaders On Leadership podcast series Dean Judy Olian and Professor Peter Guber are joined by Lynda Resnick, whose accomplishments range from the establishment of a full-service PR agency at age 19; turning Teleflora into the world's largest floral services company, and the relaunching of the Fiji Water brand -- now the largest imported bottled water company in the U.S. Resnick is perhaps best known for her pomegranate evangelism; she and her team at POM Wonderful have helped make the fruit ubiquitous in our society.

Early on in the video, Guber asks what about a brand's story that has to be so compelling. Resnick first notes that the narrative -- story telling -- has been part of the human experience since before there was written language. "It's part of our DNA," she said. 

Then:

"It's really important that your brand has a story to tell. But it has to be a real story. It isn't the sort of thing that you can make up as you go along. It's really finding the value in the brand, the unique selling proposition, and telling your potential consumers about it." 

Follow this blog and the UCLA Anderson web page as we release new segments of “Leaders on Leadership” all summer, with luminaries such as television and radio host Larry King; Los Angeles Lakers General Manager Mitch Kupchak; Kent Kresa, chairman emeritus Northrup; Pat Woertz, chairman and CEO, Archer Daniels Midland; Frank Cooper, SVP, chief consumer engagement officer, PepsiCo; and Paul Irving, ex-managing partner, Manatt, Phelps and Phillips and 2010 Fellow (in residence) Harvard University's Advance Leadership Initiative.

Leaders on Leadership

David Feinberg, Leaders on Leadership

Robert Iger, Leaders on Leadership

Entrepreneurship Bootcamp for Veterans: "Our True Privilege ... "

Tomorrow, July 23, UCLA Anderson proudly commences its fourth annual Entrepreneurship Bootcamp for Veterans.

Known on campus simply as the EBV, the Entrepreneurship Bootcamp for Veterans is a program originally conceived by the Whitman School of Management at Syracuse University in 2007. A year later, the EBV Consortium of Schools was established; it included Anderson, Florida State University's College of Business, and Mays Business School at Texas A&M.  In 2009 The Krannert School of Management at Purdue University and the University of Connecticut School of Business joined the consortium.

 

Here is a description of the program:

The 'Entrepreneurship Bootcamp for Veterans with Disabilities' (EBV) offers cutting edge, experiential training in entrepreneurship and small business management to soldiers, sailors, airmen, and marines disabled as a result of their service supporting operations Enduring Freedom and Iraqi Freedom. The intent of the EBV is to open the door to entrepreneurial opportunity and small business ownership to you, by developing your competencies in the many steps and activities associated with creating and sustaining an entrepreneurial venture, and also by helping you coordinate your efforts with programs and services for veterans and others with disabilities.

500 Words With Sari Closet

(The first in a new series about UCLA Anderson student and alumni entrepreneurs)

By Julie Epstein

Nisha Patel’s spring break plans were derailed this year. Instead of going on vacation, she was deployed to India by two classmates (and soon-to-be business partners) Sreesha Vaman and Patrick Gengoux to purchase saris. The three 2011 UCLA Anderson graduates, along with classmate Bryan Leong, recently launched Sari Closet, an online boutique offering customers a chance to rent authentic saris imported from India. Last week, Vaman and Gengoux spoke with us, laying out the facts and explaining how their nascent company came to be, where they hope to take it in the future, and how their Anderson experiences helped to actualize their vision.

The Business plan: what began as an in-class assignment quickly turns into a tangible business:

Patrick Gengoux: “Nisha had the idea originally; she wanted to use the idea for the Business Plan Development class and she teamed up with Sreesha, myself and some others to write the plan during fall quarter 2010.  As the final presentation for the class we pitched the idea to some venture capitalists.  Then after the first week or so of winter break, Professor Jeff Scheinrock told us to call him back, so we worked with him, talked amongst ourselves and finally we decided we (could make it a real business). We later entered the Knapp Venture Competition, where we made it to the second to last round. Each of us put in some money and then we actually shipped Nisha off to India to go find some saris. We officially opened for business on May 26.”

Tradition meets technology. Sari Closet succeeds in breathing new life into this old school fashion staple of South Asia, the company relies heavily on social media networking to keep their products relevant and reachable:      

Sreesha Vaman: “We’re very happy with where the volume is so far. We look at Facebook and Twitter traffic, as well as website traffic, so we’re excited about where we are with the business.  We’re on the cusp of taking the next step: increasing awareness to be a bigger presence on the web. Our goal is to be a bigger part of the sari culture and community.“

Vaman and Gengoux explain how their collective cultural backgrounds and business savvy they culled from their experiences at Anderson have allowed them to grow their company and reap the rewards of entrepreneurship.          

Gengoux: “I didn’t come to Anderson with the idea of starting a business when the opportunity came along. You can really only create wealth and help people out by starting your own business and building companies from the ground up. It’s a serious undertaking, a tremendous amount of work and a huge risk, but at the end of the day we know we have a great project we can execute.

Vaman:  “I had no thoughts towards starting a business. I took Professor Scheinrock’s course because it provides great resources to entrepreneurs and I felt I wasn’t taking advantage [of those resources]. We took this company and it blossomed from a concept to a business and I’m really enjoying it. It changed my outlook as an entrepreneur.”

Shop for your sari at saricloset, click here

Shlomo Benartzi On Investments, the Intuitive Mind and Loss Aversion

Professor Shlomo Benartzi is a leading authority on behavioral finance with a special interest in personal finance and participant behavior in defined contribution plans. He also serves as co-chair of UCLA Anderson's Behavioral Decision-Making Group. 

Benartzi’s is perhaps best known for the development of Save More Tomorrow™  or "SMarT", a behavioral prescription designed to help employees increase their savings rates gradually over time.  Along with Richard Thaler, Chicago Booth's Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics, he was recognized by Money as one of 2004’s “Class Acts” for SMarT’s success – increasing savings rates in one plan from 3.5% to 13.6%.  Benartzi is also chief behavioral economist at Allianz Global Investors Center for Behavioral Finance, or BeFi.

In a recently released white paper called "Behavioral Finance In Action,  Benartzi sets out to illucidate for financial advisors the psychological and emotional underpinnings of client decision making with a goal of improving that process for both parties. 

In the paper, Benartzi references Nobel Laureate Daniel Kahneman's notion of "two minds" in decision making. One mind is the "intuitive mind" which makes rapid decisions easily and the other is the "reflective  mind" which is "slow, analytical and requires conscious effort." 

Writes Benartzi:

Classical economics held that people are rational, self-interested and have a firm grasp on self-control. Behavioral economics (and common sense) showed instead that we are not as logical as we might think, we do care about others, and we are not as disciplined as we would like to be. It is not that people are irrational in the colloquial sense, but that by the nature of how our intuitive mind works we are susceptible to mental shortcuts that lead to erroneous decisions. Our intuitive mind delivers the products of these mental shortcuts to us, and we accept them. It’s hard to help ourselves.

UCLA Anderson Presents "Leaders On Leadership" -- Week Two's Guest: UCLA Hospitals Chief Executive Officer Dr. David T. Feinberg

 

In Week Two of the Leaders On Leadership podcast series Dean Judy Olian and Professor Peter Guber are joined by Associate Vice Chancellor Dr. David Feinberg, Chief Executive Officer of the UCLA Hospital System. In the video, Feinberg talks about what he believes are the qualities of great leadership:

"To me, it's pretty straightforward. I think leadership boils down to three things. I think it's integrity, passion and humility ... in my organization, none of us are leaders, I think we're healers and I look for healers that have incredible passion about what they're doing, have great integrity and put patient care above everything else and also are humble because it's a very, very humbling profession. 

Follow this blog and the UCLA Anderson web page as we release new segments of “Leaders on Leadership” all summer, with luminaries such as television and radio host Larry King; Los Angeles Lakers General Manager Mitch Kupchak; Kent Kresa, chairman emeritus Northrup; UCLA Hospitals CEO David Feinberg, Pat Woertz, chairman and CEO, Archer Daniels Midland; Frank Cooper, SVP, chief consumer engagement officer, PepsiCo; and Paul Irving, ex-managing partner, Manatt, Phelps and Phillips and 2010 Fellow (in residence) Harvard University's Advance Leadership Initiative.

Homeownership Rates Could Continue to Drop As Access to Financing Tightens and Attitudes Shift

In 2004, homeownership rates rose to an all-time national high -- 69.2%. By the time the first quarter of 2011 rolled around, the rate had dropped to 66.4%. Now, a new study released today by the Mortgage Bankers Association Research Institute for Housing America (RIHA) says this drop reflects a decline from unsustainable levels to something closer to historical averages. The paper, titled Homeownership Boom and Bust 2000 to 2009: Where Will the Homeownership Rate Go from Here?,"  was co-authored by Stuart Gabriel, UCLA Anderson's Arden Realty Chair, Professor of Finance and Director, Ziman Center for Real Estate and Syracuse University's Stuart Rosenthal.

The study found that the increase in homeownership rates was most pronounced in the under-30 demographic and that the increases were concamitant with relaxed credit conditions that allowed more households to avail themselves of mortgage credit. Following the economic crash, trends have reversed and homeownership rates have returned to 2000 levels. 

In a press release that accompanied the release of the report, Gabriel is quoted:

 “The question of why homeownership rates are falling now is really a question of why they were so high during the middle of the last decade. said Gabriel. From the late 1960s to the mid-1990s, U.S. homeownership rates were relatively stable between 64 and 65 percent. Our findings suggest that the boom and bust in homeownership rates over the last decade was driven in part by an initial relaxation of credit standards followed by a tightening of credit with the onset of the 2007 financial crash.  Evidence also suggests that households headed by people in their 20s and 30s were willing to take more risk with respect to homeownership in the boom years, followed by a return to a more conservative approach after the crash.” 

Among the key findings in the report are:

• A combination of changes in mortgage credit standards and attitudes towards investment in homeownership likely contributed to much of the boom and bust in homeownership over the decade
• • Changes in the population’s socio-demographic composition and economic attributes also served to lower homeownership rates between 2000 and 2009
• Individuals appear to have been more risk-seeking in their approach to home buying in the first half of the last decade.  This changed to a more risk-averse posture following the real estate meltdown, and
• Between 2000 and 2009 there was a one percentage point increase in the homeownership rate. But, were it not for the shifts in access to homeownership through easier credit and the changes in socioeconomic conditions, the homeownership rate would have actually fallen between 2000 and 2005, rather than increasing.  

To view the entire report, please click here

To visit the Ziman Center for Real Esate Website, please click here

Commercial Real Estate In Cali: Light at the End of the Tunnel

Since 2007, the UCLA Anderson Forecast and Allen Matkins have collaborated on a Commercial Real Estate Survey and Index to "better predict future California commercial rental rates and vacancy rates." 

The latest survey was released today.

The survey is comprised of a survey of commercial real estate developers in each of San Diego, Orange County, Los Angeles, the East Bay, San Francisco and Silicon Valley and the current version "provides clues to current CRE asset prices and a turn around in the market." According the the press release:

"Over the past 18 months Class A commercial real estate values have increased to near peak levels. The increase is not supported by the current rental and occupancy rates. This rise in asset prices is either an indicator of investor expectations of improving fundamentals over the next three to four years or the beginning of a new asset bubble. The June 2011 Allen Matkins UCLA Anderson Forecast California Commercial Real Estate Survey, a forward-looking survey of commercial real estate developers, is consistent with an expected improvement in fundamentals."

UCLA Anderson Forecast Senior Economist Jerry Nickelsburg authored the report. He said:

"Optimism with respect to office and industrial market fundamentals in 2013 and 2014, which first appeared a year ago, is an important precursor to the re-start of commercial construction. While the overall sluggishness of the general economic recovery will engender a slow recovery in commercial real estate as well, the prospects are improving.”

The survey demonstrates increasing developer optimism in major California cities, which in turn justifies increased asset prices. Northern California markets in the Silicon Valley and San Francisco lead the state's turnaround, while San Diego and Los Angeles in the south not far behind. 

The full report is available for download here.

 

What's A Typical Master of Financial Engineering?

UCLA Anderson launched it's Master of Financial Engineering program in 2009. It's current class -- the Class of 2011 -- marks its third graduating class. The program is aimed at training  "quants" for careers in risk management, investment banking, money management, derivative pricing, private equity, hedge funds, and in technical operational areas of corporate finance. 

In this recently released video, MFE Lecturer and Executive in Residence Teri Geske discusses the differences between a typical MBA program and an MFE program and describes the typical MFE student.

 

To view the entire video with Geske, please click here. 

For more information on Anderson's MFE program, please click here.