Friday, May 22, 2009


I read an unfortunate novel this week, “Security Breach” by Humphrey Hawksley. It’s a waste of time, partly because it could have been much better. One of Hawksley’s blunders is his desire to be the next Orwell, by imagining a near-universal police state. Simply put, he does not sell the idea well. Hawksley plays on media-driven fears, and comes off as a neo-Luddite instead of a thoughtful critic of modern technology. But the book did get me pondering about the tipping point of the police state.

Law is necessary, but when the power to make and enforce laws is abused law degrades to oppression. This can be understood on a linear scale:

Without law at all chaos reigns, there is no justice or sense of order, and people will do little to risk their safety or possessions. Law is demanded by the people, to protect their persons and property.

At a certain point, sufficient law and its enforcement creates conditions where the public experiences security and freedom in a balance which allows individual expression and industry, but also protects both individual rights and the general welfare.

However, as time progresses political agents become inclined to act in the nominal public interest, and impose burdens on the public in the feigned interest of the public welfare. Laws which are not reasonable, which are too numerous or intrusive, or which benefit a few at the cost of the many, represent oppression and represent the road to the police state.

Taxes, for example. If you own land, you know that you will never be done paying for it, because the government has arranged for perpetual property tax. If you make money, it will be taxed as income or as an investment, and if you spend it it will be taxed again as sales tax, plus luxury tax if you dare to spend it on something the government considers non-essential. Your gasoline is taxed, so are your utilities, so even necessities lead to you paying more tax. Need I continue? Anyone who works or is successful, gets taxed in virtually every way possible.

It’s not just the rate either, but the infinite number of ways the government lies about what it’s doing. Taxes are hidden and disguised as ‘fees’, ‘tariffs’, ‘funds’, and so on, in a never ending con game that fools no one but the politicians.

No one with an IQ above 50 or a birth date in the 20th century seriously considers themselves to be under-taxed.

Many people accept their condition, either as a fact of life or a condition beyond their control to change. That’s not the same as thinking it just or a true representation of the people’s will, as our country’s Founding Fathers intended.

Why does excessive taxation represent a police state? Enforcement is universal, for one thing, and opposition is either mocked, suppressed, or both. The IRS may be fair or not, but they do not have to follow the normal court procedures required; they have their own courtrooms and judges, in fact. Where money is concerned, the one thing you may be sure of is that if you have any, the government will chase you down to get it.

Moving back to the overview though, the excess of law is also apparent in just how easy it is to get into legal trouble. You can be charged for not wearing a seat belt, even though you put no one else at risk. You can be fined for failing to sign your tax return in ink. You can be fired for a bad credit report, even if the report is in error. Government now instructs you on how you should eat, drive, exercise, sleep, enjoy yourself on vacation, and on what you should spend your discretionary income. The government also can now abrogate your property rights, devalue your investments, and limit your access to your own bank accounts, all in the name of ‘stimulus’ – how’s that for “hope and change”?

Laws are necessary to protect the public from violence, but excessive control by government is intolerable, historically so. Strange as it may sound, President Obama seems to be a man who knows many details of the law, yet he fails to understand its context and limit.

Thursday, May 21, 2009

The God Factor

People follow habits all their lives, and even subsequent generations often follow in the routines and practices they know. This creates the impression that human behavior is predictable, and that strategies can be created which take advantage of human habits and routines. To a degree, this impression is valid.

But only to a degree.

Things change, and not always in predictable ways. Historians spend a lot of time trying to link apparent causes and effects in events, though often their judgment is subjective and really does not prove their case. The connection between events, conditions, and subsequent actions is real in some cases, but not all. Like the belief that human behavior will always proceed as it has gone before, the belief that the future can be predicted perfectly by drawing up behavioral theory from past events is mistaken, and when trusted too much will itself draw people into grave error. There is an additional factor to consider besides the habit and history of humanity, a factor which is not obvious but very real in the direction of events and reality as it unfolds. That factor is sometimes a catalyst, sometimes the controlling direction itself, and in some cases it displays an unstoppable force which turns back events against the tide of history and human predilection. That factor brought about the rise and fall of empires, whether Egypt, China, Rome, Britain, or America. That factor singled out individuals of note to rise in prominence, to be ‘in the right place at the right time’ for the need of the moment, whether an Adam, an Abraham, a Moses, a Cincinnatus, a Plato, a Paul, a a Galileo, a Luther, a Newton, a Washington, a Franklin, a Lincoln, a Churchill, and so on.


Such a simple noun, a word immediately rejected by some because it denies the individual his imagined right to hubris and narcissism, by others because it begins the illumination of our limits, by still others for its inconvenient Absolutism. Others read the word and imagine a puppet to do their bidding, or an intellectual construct which just so happens to fit their personal worldview. Others imagine a force against which to rebel, and others a weapon to use to coerce people to obey their will. Few indeed stop to consider God as a being, let alone listen for His word and will, much less submit to holiness as a vocation. Discovery of one’s mortality, defined not only in length of life but limits to control of your own condition and choices, is more than most of us can easily accept, myself included. And many people, overtly or without even knowing it themselves, rebel against the right and authority of God to rule His own creation.

When I was younger, I saw many things to wonder at, and many things to despair. Racism is not what it was, but it has not died away completely, only changed its face and membership. Sexism also continues, though it also metamorphosed into something unforeseen yet still potent and feral. It is still fashionable to praise the popular and the beautiful, while mocking and taunting those unfortunates whose appearance or station is not sufficient to guard them from the malice of the elite. The ‘wrong’ politics, an unfortunate disadvantage in articulation, a sudden shift in the mood of the media or the public, and everything can be lost in a moment. In the same way, we see over and over some new mogul, leader or celebrity who has done nothing to merit his sudden ascent to fame and power, but who seems almost to have been created for the moment. The matter is not often considered, and when it is, too often it is dismissed with a shrug and a word synonymous with ’coincidence’. That is not to say that our efforts are unimportant, but it reminds us to consider that we do not control everything in our horizon, and there are many things out of view which will have great meaning for our fate and future.

Not all goes as planned, nor as badly as feared. I am old enough to recall many fears of Doomsday, and many promises of permanent improvement which failed. It is well to be cautious of the promises of men, whether good or ill, but important as well to trust God, for in His hands alone the truth unfolds.

Wednesday, May 20, 2009

When the “B” in MBA Does Not Stand for ‘Business’

I have just completed my course of study in earning my Master of Business Administration degree. While the official grades will not be released until May 22 and the actual degree will not be mailed until the end of June, I have finished all the coursework and will finish at UHV with a GPA of 3.94. More to the point, I have had the pleasure of working with a broad range of faculty and students. And while I am generally proud of my fellow graduates and respect the talents and hard work of our faculty, I also understand why Scott Adams has been making fun of MBA holders this week.

Sadly, there are quite a few MBA candidates and graduates who really do not understand what the degree is for, and who are frankly going to cause harm to the company they join and damage the school’s reputation by association, because their focus is on their own advantage, rather than in seeking to improve their company through hard work . I am appalled to see that so many people think that the MBA is a lever for their own advancement, rather than a tool to be used to find solutions and improve performance. That is, the MBA holder does not solve problems and find solutions simply by being on the scene, he or she should understand that the courses and resources provided in the MBA curriculum are meant to provide tools that the individual may use to find the answers and solutions needed in their work, and that while they may hope for personal reward and advancement, the proper focus is on service, not ego.

Another problem is the unprepared MBA holder, someone who has the degree but does not know how to properly use it. I discovered a sad example of this at the MBA Case Competition, where the majority of teams proposed recommendations which were actually in conflict with PetSmart’s clearly stated goals and objectives. In a real-world situation, a consulting group which is unaware of the corporate strategy of its client is going to go out of business very soon. In this case the individuals may have the best intentions, but failing to base recommendations on the company’s actual condition and needs is well below a professional standard.

My father warned me many years ago against being impressed by lofty degrees, While he himself held a Masters degree in Mathematics, as well as Bachelors degrees in Chemical, Electrical, and Mechanical Engineering, he made it a point never to boast about it or give the impression that he was smarter than other people. At the same time, he was never impressed by people in high office or who attached proud initials after their name, be it ‘PhD’, ‘MD’, ‘JD’, what have you. He always seemed to me to take after John Adams in that respect, a man who truly understood the character of republican democracy in practice. That may seem a non-seqitur in this discussion, except that many people fall into the habit of assuming that a grand title or high-sounding designation makes a person more capable than ordinary folks. That’s not to disparage the value of an MBA, I agree it implies a degree of work and ability, but at the same time no MBA makes a person immune to mistakes, and foolishness from a self-important person can be much worse than the same nonsense from someone more willing to admit he could be wrong.

Tuesday, May 19, 2009

Preparing Business Professionals

My team did not win the Spring 2009 MBA Conference at UHV. I am not writing this out of bitterness, I think, but clarity and full disclosure before the rest of this article. That is, the reader should know about any reason I have for bias. This article examines the practice and assumptions of the Case Competition at UHV, and suggests improvements.

The Master of Business Administration degree (MBA) is a unique academic credential. Academic degrees verify that the student has demonstrated knowledge and comprehension of a subject material to the degree required by his college, but the MBA also certifies practical ability; the MBA holder has been authenticated as a problem-solver and business leader, a person capable of making his employer stronger and more successful. The degree was designed for the real world, not merely the one in theory. Consequently, the MBA course of study ought to include a capstone course which tests the candidates’ ability to address real-world strategic decisions.

The University of Houston system has fortunately grown up with an ingrained need to prove itself. The Houston metropolitan area offers many opportunities for college and university experience; institutions in the area include Rice University, Houston Baptist University, St. Thomas University, the University of Texas Medical Branch (UTMB), the Baylor College of Medicine, Houston Community College, Prairie View A&M, Texas Southern University, Texas Woman’s University, Tomball College, Lady of the Lake University, Sam Houston State University, a number of for-profit schools like the University of Phoenix or DeVry, and of course the University of Houston. But that’s not all. UH also has had to compete with major players at the state and regional level for attracting top students, like the University of Texas and Texas A&M. The University of Houston has done well for itself over the last few decades, especially the Bauer School of Business. UH has established itself as a solid business school, recognized for excellence in its MBA programs.

Of course, UH-Victoria cannot claim quite the same prestige as UH’s main business school, although its faculty is shared to some degree. However, UHV’s growth strategy over the past half-decade reflects an ambitious set of goals, including the school’s accreditation as a member of the AACSB, its expansion from a two-year school focusing largely on graduate students to a four-year university with dormitory space and a full-scale staff for a complete range of academic studies, and the development of three major MBA programs in six fields of concentration. UHV is well on its way to becoming a force to reckoned with among business schools in Texas. The key focus for UHV, however, is to be aware of its relative newness, which can work to its advantage or represent a threat to the school’s success. And that is where the Case Competition comes into the story.

The Strategic MBA is UH-Victoria’s mainstream MBA plan (the other programs are the Global MBA for international business, and the ‘bridge’ MBA for BBA students who want to fast-track to their MBA as well). The Strategic MBA requires a capstone course called Strategic Management. That course is designed to test the MBA candidates’ knowledge from the courses they have taken in their time at UHV, combining the knowledge and experience from class and work to research, analyze, and make strategic recommendations for a real-world company. This project is done in stages, both individually and in teams, and culminates in a formal presentation to a panel of judges at a case competition held at the end of the semester. The top three teams as voted by the judges are recognized with certificates and permanent citation on a school plaque. Since the MBA program does not recognize cum laude, magna cum laude, or summa cum laude accolades, nor is there an official class ranking for graduate students, winning the case competition is one of few ways for a student at this level to stand out. The other notable honor is selection to Gamma Beta Sigma, the business school honor society.

Having said so much to get to this point, I will try to focus on the key points from here on in to the matter. Our target company this semester was PetSmart, the leader in the Pet Supplies and Services industry. Our team did well in all aspects of our research and analysis, and our recommendations not only were effective and practical, but were also well in alignment with the strategic vision of the CEO and leadership team. Once we completed our research and analysis of the industry and company, its focus and issues were easy to determine. For example, the following points became obvious:

[] The pet supply and services industry has been growing at a faster pace each year than PetSmart
[] With the exception of long-term store leases, PetSmart has effectively no long-term debt
[] CEO Philip Francis has emphasized the reduction of capital expenditures each year, and has announced his intent that no more than 4 percent of gross revenue should be spent on any capital project, including new store openings, the reformatting of stores to emphasize services, and any additional promotions or projects
[] PetSmart maintains relatively large liquidity for its industry (33.6% of assets are current)

The combined effect of these observations means that PetSmart is very risk-averse, and the leadership team has repeatedly emphasized their intention to avoid expensive capital projects. Accordingly, any realistic recommendation to the PetSmart board would have to be paid from current expenses, and be incremental in nature to avoid significant risk. Keep that in mind, it becomes important in a little while.

My team also focused on PetSmart’s “worry list”, a 32-item list in the Annual Report which identified, in order, the top concerns for the company. Without going into too much detail here, those worries focused on the revenue from new stores, on growth for services offered at PetSmart stores, on retention and effective training of key employees, and on better control of the supply chain. This directly led to our team’s four recommendations:

1. Perform site surveys and use specific demographic data to determine specific sites for new store locations;
2. Promote services using a national campaign and the Petperks card;
3. Create the role of ‘PetStar’, for experienced and motivated employees with growth potential;
4. Expand supply lines to include local brands recommended by managers and requested by customers

What made us confident that we had a winning position, was that the recommendations neatly dove-tailed with the company’s stated goals and priorities, and were in perfect alignment with the issues identified through the analysis. We saw tremendously profitable projects, low-cost and low-risk, which could be incrementally put into practice, all of which addressed the key areas of PetSmart’s directors’ focus and aligned with the company’s vision.

The exposition of our recommendations went well, though it had a few hitches. First off, some of our team were uncomfortable with public speaking, and this diminished our presentation a bit, and also in the Q&A session. While our data was perfect and our recommendations better than anyone else’s (wait for it), this imbalance of presentation certainly cost us points. We also had a problem with one of the six panelists, a judge who all but demanded we pay for our projects with capital expenditures, even though we had determined early on that such an action was not only unnecessary for our projects, but in opposition to the clear intent of PetSmart’s directors. At the time we thought that judge’s resistance to current expense was strange, but it later revealed a more serious problem with the process.

We had to wait a week to find out the results, and even then the announcement was oddly subdued. It showed up on a school blog Friday evening, and eventually found its way to the SOBA website by Monday. As of yet, none of the teams have been told their scores, provided any detailed feedback from judges, or learned – officially anyway – what won the competition for the three recognized teams. Despite hard work which received a 99% grade from the professor for the overall project, my team did not place. There has been no announcement of how the eleven teams which did not win scored, so there is no official word on where anyone placed who was not one of the winners. All in all, a strange way to conclude the business, although both the class professor and the school’s dean had promised useful feedback from the judges. It remains to be seen what actual details will be made available to the contestants.

I have to be honest and admit that I believed my team should have taken one of the top slots, especially after we discussed the competition with members from other teams. While a comprehensive review is not possible unless the school decides to release the details from the judges’ notes and the competing teams’ presentations, informal chats with other students revealed that the chief basis for points in the competition was style far more than substance. The reason lies in two factors; the rubric used for scoring the presentation and the judges’ preparation for the competition. The rubric had six sections, with scores from 1 to 4 in each section, so each judge assigned a score ranging from 6 to 24 for each team, and with six judges that creates a range of 36-144 points total possible for a team. So far, easy to follow. A copy of the rubric can be found here.

Looking more closely at the rubric, certain additional information comes to light. For example, given the fact that the teams would have worked all semester on the project, it is unreasonable to me to imagine that any of the teams would fall into the ‘1’ grade for any of the sections except ‘audience response’, nor do I believe that even there would all of the judges be so harsh on the teams. With regard to the “Issues Definition” and “Business Analysis”, I do not even believe that any of the teams would fail to score anything but 3’s and 4’s in those areas from the judges. What this does is place heavy emphasis on the recommendations, organization, and audience response, with the strongest factor in play being style rather than function. That is, people who could speak well would have the advantage over those who were less relaxed and smooth, even if the smooth talkers presented impractical recommendations and the less relaxed team were perfect in their analysis and recommendations. The first mistake made was in constructing a rubric which counted the practicality of the recommendations to a lesser degree than the style of presentation. I certainly recognize the value of presenting your case well, but a solid recommendation presented with some rough spots should definitely be scored more highly than an unrealistic recommendation presented with flair. Otherwise, the results would be as absurd as scoring a math test on the basis of flourishes and calligraphy, discounting whether the answer is even correct. I will come back to this crucial point.

Second, the judges had not been fully briefed on PetSmart’s corporate strategy or vision. They were unaware that the company is very risk-averse, and so their board of directors would be resistant to any proposal involving increased capital expense, long-term commitment (such as buying out a rival or supplier) or significant deviation from the vision laid out by Philip Francis in 2003. The emphasis of the project was that teams would make proposals as if to the board at PetSmart, so the character and tenor of the actual board is integral to the validity of recommendations made, and the judges’ response to them. In the case competition, all of the winners made recommendations which – speaking bluntly – the real PetSmart board would have rejected because of their risk, heavy financial commitment and capital expense, that is, the need to take on debt in order to finance the projects anathema to PetSmart’s stated objectives and goals. That the judges did not challenge these recommendations for their variance from PetSmart’s position is bad enough; that these recommendations were rewarded as the best demonstrates a far more troubling consequence of the competition’s structure.

I said the need to make valid recommendations was crucial, and it is very much so. The MBA is certification that the individual, whether an employee or a consultant, is qualified to perform effective research and analysis and make recommendations which will improve a company’s strategic position and performance. This can only happen when the individual properly understands the company’s range of options, its corporate strategy and primary goals. The case competition is the final episode in the capstone course of the program of MBA certification; beyond that point the student receives their diploma and moves on to the real world, where reality is far less forgiving of an invalid recommendation, no matter how well it is delivered. The glib, the trendy, these things must have no place in the mind or focus of the true professional, and so it is the worst sort of consequence to penalize valid recommendations and reward invalid projects, no matter how polished. It may seem inconsequential, that a competition was decided more by judges’ moods and their subjective reaction to style than by the actual corporate strategy of the target company and the functional relevance of the specific recommendations, but this is an area where there is much work to be done. In future years, it would be very much to UHV’s advantage to make sure the judges were properly briefed on the nature of the target company, that actual business executives were included in the panels rather than just faculty and prior case winners, and that feedback both to and from the participating teams in the weeks following the competition should be much broader and detailed than the present practice. At the very least, the school could rest assured that their case winners would be properly equipped for the real world challenges they face so soon after graduation, and that their competition was as realistic as humanly possible to create.

Missed Opportunity

[ - pending - ]

Monday, May 18, 2009


mutter mutter mutter