What tea can be

With the acquisition and integration of Teavana, Starbucks makes its biggest play to bring an elevated experience of tea to the world
Teavana, Annie Young-Scrivner
Annie Young-Scrivner of Teavana

Behind the elegant wooden counter, a wall of cylindrical tins rises to the ceiling in tidy vertical regiments of white, green, black, blue, purple, orange and red, like a color-coded apothecary shop.

Each contains a different mystery, an aroma, texture and hue as intriguing as the name of the product inside. The baby-powder jade of Imperial Matcha. The earthen rumples of Monkey Picked Oolong. The heady spices of Maharaja Chai. The grassy blades of Gyokuro Imperial. The tightly rolled nuggets of Black Dragon Pearl. The fruited potpourri of Pineapple Kona Pop. The gilded fronds of Silver Needle. And maybe 100 more unique expressions of leaf and bud, herb and fruit.

Infused in hot water, they produce a kind of alchemy—rich, distinctive flavors sought the world over for comfort, invigoration, goodness in a cup.

This is tea as it is meant to be. This is Teavana.

It’s also Starbucks. With its latest and largest acquisition, the Seattle company renowned for bringing a heightened coffee experience to consumers around the globe is looking to do much the same with tea.

“Teavana is in its infancy, and the $125 billion tea market is ripe for reinvention and innovation,” says Annie Young-Scrivner (BA 1990), the Starbucks executive vice president who has led the initial integration and innovation of Teavana. “We are well-positioned to take advantage of that growth, reimagining the tea experience in the United States and, over time, around the globe.”

Why tea?

When she got the call to lead Teavana early last year, Young-Scrivner was, likewise, well-positioned to catalyze its transformation into a global brand within a global brand. She came to Starbucks in 2009 after a sterling 20-year career at PepsiCo, where she led a number of its international businesses. At Starbucks she served as the company’s first global chief marketing officer, as president of Tazo Tea and as president of Starbucks Canada before taking on Teavana.

She loves tea.

“Growing up in a Chinese household, tea was everywhere,” says Young-Scrivner, who emigrated from Taiwan to Seattle when she was seven. “We drank it, cooked with it, used it as medicine. I truly believe in the magic of tea to naturally improve the lives of everyone in the world, in more flavors and in more ways imaginable.”

Teavana-looseleaf-teas-webIn this sentiment, she is hardly alone. Since a few legendary leaves of a Camelia sinensis tree first blew into a Chinese emperor’s boiling drinking water nearly 5,000 years ago, tea has become a treasured staple of cultures around the world, from China and Japan to the Middle East and North Africa, from India to Europe and, of course, the United Kingdom. Though the United States lacks a discernable tea tradition (perhaps a legacy of that famous patriotic act of civil disobedience in Boston Harbor back in 1773), Americans do, in fact, drink 800 million cups each week.

As a global market, tea is nearly boundless. The only beverage more consumed is water. And tea is gaining.

But potential alone isn’t what makes tea a good fit with Starbucks. It’s the complementary relationship between tea and coffee. Young-Scrivner says that the two fulfill different consumer “need states” and different “day parts.” In other words, the same people tend toward one beverage or the other at different times of day and for different reasons. Coffee to perk up (maybe in the morning or early afternoon), tea to calm down (late afternoon, say, and evening). For Starbucks, tea represents an opportunity to build a distinct brand in a category that isn’t coffee, and a way of increasing capacity in every store.

Why Teavana?

the-original-starbucksOf course, none of this is news to Starbucks. “We were founded as Starbucks Coffee, Tea and Spices,” reminds Young-Scrivner. “We’ve always been fascinated by tea.”

From its first day in business—Seattle’s Pike Place Market, 1971—Starbucks has served this alternative to coffee. Its 1999 purchase of Portland-based Tazo added a discernible line and more varieties of tea. But the 2012 acquisition of Teavana was a game changer, immediately elevating Starbucks to the upmost echelon of the tea industry.

Founded in Atlanta in 1997, Teavana has grown to more than 300 specialty retail stores located primarily in upscale shopping malls across the US and Canada. These compact emporiums sell a curated line of tea pots and accessories, made-to-order hot and cold beverages, and loose-leaf teas of the highest grade—a product that hardly resembles the sacks of desiccated filings that sometimes pass for tea.

Foster-Teacloseup-webAs Starbucks does with beans, Teavana sources only super premium tea leaves to be processed into the purest varieties of white, green, oolong and black teas, as well as endlessly creative herbal blends. “The acquisition of Teavana has given us tremendous expertise in tea—both a mastery of 5,000 years of tradition and these youthful epicurean blends that are so provocative in taste and profile,” says Young-Scrivner. “Plus, a national footprint in tea.”

On the other half of the equation, Starbucks brings a global supply chain, a wealth of digital assets, and deep expertise in branding in retail design. Plus, an international footprint of more than 22,000 stores across nearly 70 countries.

Through Teavana, Starbucks intends to make tea the biggest thing since, well, coffee.

The big infusion

First, the matter of integrating companies. Starbucks has plenty of experience, having previously acquired Tazo (tea) in 1999, Ethos (bottled water) in 2005, Evolution Fresh (juice) in 2011, and La Boulange (baked goods) in 2012.

But Teavana is the biggest, and perhaps the most essential to the company’s long-term growth. So respecting and protecting Teavana’s culture and heritage—so integral to its customer experience—has been of the utmost importance.

Teavana-teawall-webBeyond Young-Scrivner, two other Huskies have played a central role in this delicate integration.

On the quantitative side, Robert Herring (BA 1992) leads Teavana’s finance, accounting and business analytics departments. In addition to transporting finances and accounting into the Starbucks system, his team generates the financial intelligence that informs big-picture strategy.

“It takes a lot of knowledge about the structures of both organizations to do a successful integration,” Herring says. “And we need to stay nimble, and be able to execute changes quickly.”

On the qualitative side, Anna Hawk (BA 1990, economics) heads Teavana’s human resources department. A veteran of several integrations in her 23 years at Starbucks, Hawk’s team is responsible for helping to integrate several thousand Teavana partners (employees) into the Starbucks systems.

At a personal level, she says it’s a critical piece of the integration. “We take extraordinary care with our new partners as we bring them into the Starbucks family,” Hawk says. “It goes back to what (chairman and CEO) Howard Schultz has always believed: if you take care of your partners, they will take care of your customers.”

Lens of humanity

That sentiment reflects Starbucks’ perpetual promise to be “performance driven, through the lens of humanity.”

Principles in Practice

Teavana has been quick to embrace Starbucks’ guiding principles, including the one about making a positive impact on the world. One case in point: Teavana Oprah Chai. This unprecedented collaboration between chai tea devotee Oprah Winfrey and Teavana’s leading teaologists has been an enormous success. And, by donating 25 cents of each cup and each ounce of tea sold, Teavana Oprah Chai has raised more than $5 million for youth organizations in the United States and Canada, including Girls Inc., National CARES Mentoring Movement, Pathways to College, and the U.S. Dream Academy.

Oprah Chai Tea

“I get goosebumps thinking about it,” says Annie Young-Scrivner, who led the launch of Teavana Oprah Chai in April 2014. “It’s so cool that we can use our company’s scale to do good in the world. We want to be examples to other companies that you can do things like this and still be profitable.”

Though this philosophy had sustained the company’s growth from day one, it wasn’t until 1990, the year that Orin Smith (BA 1965) came in as CFO, that the famous Starbucks mission and guiding principles were codified. Pledges to create a workplace of respect and dignity, value diversity, source and serve the highest quality coffee, satisfy customers, and make a positive impact on the community and environment preceded—and really enabled, in the Starbucks way of thinking—the final principle of profitability.

“These statements are not so different than what you find at many other companies,” says Smith, who led Starbucks’ greatest era of expansion as president and CEO from 2000-2005. “But it wasn’t a few planners sitting in a back room thinking up words that sounded nice. This was really an explanation of who we were and what we wanted to continue to be as a company.”

Smith and the rest of the executive team resolved to endow this document with real power. They ingrained the principles in training programs, printed them on placards in stores and on the back of business cards, used them to shape every meeting agenda, referred back to them in every decision. “Those principles,” Smith says, “became as close to tangible as an idea can be.”

Before going public in 1992, Starbucks instituted health care benefits across the organization and began offering “Bean Stock,” an opportunity for each partner to become a shareholder in the company. It has long been a leader in ethical sourcing and diversity hiring. Its College Achievement Plan helps partners cover the cost of higher education. And it recently launched a campaign to hire military veterans across the organization.

The idea that a large public company could drive profitability by being socially responsible was considered radical. “I don’t think any of us were sure that we could sustain our growth—especially as we expanded into the world—while maintaining those principles,” Smith recalls. “What made it work was the culture that we created.”

Starbucks, 1992

That uncompromising culture—considered the corporate gold standard by many—becomes the foundation for the new Teavana. Young-Scrivner likes to remind her team that Teavana today is roughly where Starbucks was in 1992 in number of stores and partners. Great product, solid foundation, poised for exponential growth.

Teavana-tasting“The same core values drive both organizations,” says Jennifer Chang (MBA 2012), a product manager at Teavana. “We share our devotion to partners and customers, we source the highest quality product, and we push ourselves to be at the forefront of innovation.”

It starts with the tea. Like Starbucks, Teavana procures its raw material from the most expert growers, working with the Ethical Tea Partnership to ensure that it is produced in a socially and environmentally responsible way.

As with coffee beans, the care in sourcing shows up in the quality of tea leaves and other organic ingredients that make up Teavana’s teas and epicurean blends.

These textures and tastes are showcased in the Teavana tea bars recently opened in several cities, including Seattle, which provide a “third place” to meet and provide a deeper exploration of tea. And Seattle’s Pacific Place store is reinventing the specialty retail experience, with a full-service tea bar up front and a rich, if compact, tea journey inside.

These stores serve as learning labs for the reinvention of tea and the tea experience. This will prove important as Teavana looks to integrate into the vast constellation of Starbucks locations.

“Starbucks is very good at shaping markets,” says Suresh Kotha, a professor of management and the Olesen/Battelle Excellence Chair in Entrepreneurship at the Foster School. “If you have a distribution system and know how to leverage it, using existing stores is a great idea as opposed to building new Teavana stores from scratch.”

Integrate + innovate

Teavana-pumpkin_spice-webOver the past year, the Teavana team has integrated a line of Teavana hot teas, shaken iced teas and Oprah Chai in Starbucks stores across North America. The result? Tea has become Starbucks’ fastest growing in-store segment across the continent.

But Young-Scrivner says the real opportunity is global, the lands of tea and beyond. Teavana will be introduced in 2016 to Starbucks in China, Japan and other parts of Asia.

Bringing tea to regions with indelible tea cultures will be a real test of the concept. “When we go into tea-origin countries, we’ll go in really respecting the heritage,” Young-Scrivner says. “But we’ll not be afraid to reinvent.”

Kotha adds that any international expansion must overcome the “liability of foreignness.” In Teavana’s case, that unfamiliarity could also prove to be its greatest asset. Its target demographic is young people who care about what they consume and how it impacts the world, and who might be a bit less rigidly devoted to the old ways and flavors.

Robert Palmatier, research director of the Foster School’s Center for Sales and Marketing Strategy, says that Starbucks has proven its ability to expand markets with new twists on old tastes. “We call these product extensions, such as when Starbucks added Frappuccino to its lineup of traditional coffee drinks,” says Palmatier, a professor of marketing and the John C. Narver Endowed Professor in Business Administration. “And with so many varieties and flavors of tea, it might make for even better product extensions.”

In the same way that Starbucks convinced coffee drinkers in Taipei, Sao Paolo and Istanbul to try Frappuccino, Teavana’s epicurean blends, matcha lattes and whatever-they-come-up-with-next will be like nothing they’ve ever experienced in Shanghai, London, Tokyo and Dubai.

It comes down to exposure, to 70 million customers a week. “It’s an incredible opportunity to leverage Starbucks’ scale,” says Young-Scrivner. “If we are where Starbucks was 25 years ago, it should take us a lot less time to build the size and scale of Teavana.”

Progress and passion

Young-Scrivner has Teavana well on its way to its five-year goal of tripling Starbucks tea sales to $3 billion annually. After that, the sky’s the limit.

But Starbucks is a dynamic organization, and this fall she will transition to a new role leading the global expansion of the My Starbucks Rewards customer loyalty program.

Teavana-storeYoung-Scrivner will be the first to say that Teavana is bigger than her or any other individual. But there’s no doubt she leaves an outsize legacy, a shot of inspiration, an infusion of spirit.

“One word comes to mind when I think about why Annie has been so successful in moving us forward,” says Robert Herring. “Passion. She has an incredible passion for tea. And she has created a passion for tea in everyone on the Teavana team.”

Starbucks’ mission is to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.

It’s personal for Young-Scrivner.

“Life is short,” she says. “I believe that people should drink more tea. Really good tea.

“And that goes for coffee, too, by the way.”

Starbucks and Foster: Partners on every level

You’d have to search pretty hard to find a program or center or event at the Foster School of Business that isn’t connected to Starbucks in some important way.

Just scratching the surface, Starbucks provides financial support to Foster’s annual Business Leadership Celebration, Global Business Case Competition, Environmental Innovation Challenge, Sales Club, U Lead, Young Executives of Color and Diversity Services.

Starbucks executives serve as expert speakers, panelists, mentors, judges and advisors at Foster. They host student visits in Seattle and abroad.

The company hosted Foster’s first “Lunch and Learn” alumni event featuring a faculty expert on an on-demand topic. It provided a challenging case for last year’s MGMT 430 capstone case competition. And it regularly provides applied strategy projects for the MBA Strategic Consulting Program.

Starbucks is also a major source of meaningful internships and careers for students. It’s a top 10 employer of Foster undergrads and a top 5 employer of MBAs.

Orin's Place cafe

Last, but certainly not least, is the essential availability of Starbucks coffee and tea in Orin’s Place, the nerve center of PACCAR Hall that is named after former Starbucks CEO Orin Smith (BA 1965).

Forbes ranks Foster among Best Business Schools for MBA Return on Investment

With salaries that more than doubled, MBAs from the Foster School of Business earned strong return on investment for their degrees according to Forbes Best Business Schools 2015 Rankings.

Foster MBA graduates earned the eighth-highest average salaries ($135,000) of public schools nationwide and benefited from strong job placement and reasonable tuition rates to pay off their investment in 4.1 years.

Learn more about ROI of an MBA degree in today’s economy from Foster assistant dean Dan Poston in this unfiltered video.

Why ASEAN Matters: A panel discussion with U.S. Ambassadors to Indonesia, Malaysia, Vietnam and the Philippines

This Friday, October 2nd, the Foster School’s Global Business Center and Jackson School’s SE Asia Center will be hosting four U.S. Ambassadors to SE Asian economies (Indonesia, Malaysia, Vietnam and the Philippines) for a panel discussion and reception.

The Association of SE Asian Nations (ASEAN) is the 4th largest export market for the United States and the 5th largest trading partner. Trade with ASEAN supports more than 600,000 American jobs, and U.S. companies have more invested in ASEAN than any other country in Asia, and more than in the BRIC (Brazil, Russia, India, and China) countries combined.

Students, staff, faculty and community members are invited to join this free event:

When: October 2, 2015, 2-6pm
 (Panel: 2-4pm, Reception: 4-6pm)
Where: Walker Ames Room, Kane Hall

The Speakers Include:

photo 1The Honorable Robert O. Blake, Jr. has served as US ambassador to Indonesia since November 2013. Previously, he served as assistant secretary of state for South and Central Asian Affairs and as ambassador to the Democratic Socialist Republic of Sri Lanka and the Republic of Maldives. He holds a BA from Harvard College and an MA from John Hopkins School of Advanced International Studies.

FeldmanAlexander Feldman has been the president and CEO of the US-ASEAN Business Council since 2009. He previously served as assistant secretary of state in the Bureau of International Information Programs and as a senior adviser to the undersecretary of commerce for international trade. He has been involved in the ASEAN region for over 25 years in a career spanning both the public and private sectors. Find him on twitter: @Feld33

GoldbergThe Honorable Philip S. Goldberg has served as US ambassador to the Philippines since November 2013. Previously, he served as assistant secretary of state for the Bureau of Intelligence and Research, coordinator for implementation of UNSC Resolution 1874 on North Korea, and ambassador to Bolivia. He holds a BA from Boston University. Find him on twitter: @AMBGoldberg

OsiusThe Honorable Ted Osius has served as US ambassador to Vietnam since November 2014. He was previously at the National War College, the Center for Strategic and International Studies, and served as deputy chief of mission in Indonesia and political minister-counselor in India, among others. He holds a BA from Harvard and an MS from Johns Hopkins School of Advanced International Studies. Find him on twitter: @TedOsius

Joseph Y. YunThe Honorable Joseph Y. Yun has served as US ambassador to Malaysia since September 2013. Previously, he served as the principal deputy assistant secretary and deputy assistant secretary in the Bureau of East Asian and Pacific Affairs. Diplomatic postings include the Republic of Korea, Thailand, France, Indonesia, and Hong Kong. He holds degrees from the London School of Economics and the University of Wales.

Questions? Contact the Global Business Center uwciber@uw.edu 

Dieselgate and the “perverse halo” of Volkswagen

Yellow VW Beetle
©iStockphoto.com/Roberto A Sanchez

Guest post by Abhishek Borah, an assistant professor of marketing at the Foster School.

Abhishek Borah
Abhishek Borah

Volkswagen is in dire straits. The German car company’s ongoing “Dieselgate” scandal could exact a catastrophic toll on its reputation, balance sheet and market cap.

But how is the recall of VW diesel cars affecting the competition? Are the negative effects of this scandal spilling over to other German brands? How about brands from other countries?

In a forthcoming Journal of Marketing Research paper that I co-authored with Gerard Tellis from USC’s Marshall School of Business, we found that brands from the same country should be very concerned by a rival’s recall. The reason? A phenomenon that we call a “perverse halo,” in which negative online chatter about one brand increases negative chatter about rival brands, leading to downstream erosion of stock price and sales.

The current crisis at Volkswagen bears this out. A quick analysis shows that other German car companies have been hit hard by the VW recall, while car companies based in the United States and Asia have remained largely unscathed.

Dire Dieselgate

VW’s global recall of diesel cars that it allegedly designed to mislead environmental regulators could eat up a substantial amount of money from the company’s coffers. The company is charged with deploying software that fooled US emissions testing and using its false ecological ratings to qualify for green car subsidies and tax exemptions. According to the Environmental Protection Agency (EPA), VW actually insisted for a year that the discrepancies were mere technical glitches.

If the allegations are proven, the Volkswagen Group could face fines of up to US $18 billion and a massive reduction in future sales.

Martin Winterkorn, the former chairman and CEO of Volkswagen Group, has said he’s deeply sorry, and Michael Horn, CEO of Volkswagen USA, has admitted that they screwed up. The company is doing its best to restore consumer faith. More than $7 billion have been earmarked to deal with the costs of rectifying the deceptive software and its suspended sales of the deceptive cars in the US.

But such blatant cheating is not easily forgiven. Even a product recall brought on by an honest mistake harms a firm financially and in terms of customer perceptions of the brand (Dawar & Pillutla 2000; Rhee & Haunschild 2006). In the case of Volkswagen, however, pundits have argued that this scandal is worse than a simple recall. It could have disastrous long-term consequences to the company’s reputation, trust and brand equity.

Moreover, it could tarnish the brand image of Germany as an auto manufacturer. No wonder, then, that the German Chancellor Angela Merkel is urging “complete transparency” and has engaged the German Transport Minister, Alexander Dobrindt, to coordinate with Volkswagen.

The pattern repeats

Merkel’s concerns are well-founded.

Our paper on the social media multiplier of product recalls indicates significant negative impact on the sales and stock market performance of innocent brands (from the same country of origin). For example, we find that a one-unit shock in a recalled brand’s online chatter erodes about $7.3 million from the innocent rival brand’s average market capitalization over six days.

For the study, we examined 48 car models from Japanese brands Toyota, Honda and Mitsubishi and American brand Chrysler. But I wanted to see whether we’d find the same patterns for the Volkswagen scandal.

I calculated the abnormal returns for nine automobile brands after September 20th, 2015, the day that VW admitted its deception and issued a public apology. I selected three German brands (Volkswagen, BMW, Daimler), one European (Fiat), two American (Ford and GM), two Japanese (Toyota and Honda) and one Korean (Kia). And I controlled for market-driven fluctuations in price to isolate the effect of the recall by using the major market indices.

As you can see in figure 1, all four European brands—VW, BMW, Daimler and Fiat—had negative returns just after VW’s dark day. Volkswagen has a very negative abnormal return of -18.95% on September 21st. BMW, Daimler, and Fiat follow suit with -1.8%, -1.8%, and -3.3%, respectively. The returns remain negative until the 22nd for all four brands. Volkswagen recovers on September 23rd but Daimler and BMW are still in negative territory on September 24th. chart1

Thus, there seems to be a negative spillover for not only other German brands but also a European non-German brand.

Brands outside of Europe did not suffer the same fate. When I plotted the abnormal returns for VW against the Asian and American cars companies (figure 2), only Kia shows a negative return of -2.4% on September 21st (and it bounces back with +2.4% the next day).chart2

Table 1 shows the abnormal returns for two windows of time: the (0, 1) window, which covers September 21-22 (the first two days after VW admitted deception); and the (-1, +1) window, which covers September 20-22 (from the day before until the day after VW’s admission).table1

The conclusion is that European brands have suffered most from VW’s recall while Kia, Toyota and Honda seem to be the least impacted.

Nationality as a brand attribute

These results indicate that country-of-origin effects might be in play. Prior research (Hong and Wyer 1989, 1990) suggests that consumers might use “country” as a brand attribute and make similar inferences for brands that are associated with the same country as the recalled brands (and opposite inferences for brands from other countries).

For example, consumers might think that brands of the same country have similar processes to develop a product. However, we find that even Fiat has taken a hit post the scandal. And this despite the positive brand coverage of Fiat after the Pope’s visit this last week when he used a Fiat to travel around.

Indeed, authorities in South Korea have announced pollution control investigations into cars manufactured by Volkswagen and other European car manufacturers. Thus, this scandal could lead to negative spillovers across a continent’s brands.

The downside of chatter

One important driver of the negative reaction of stock market investors could be the investors inferring that consumers will distrust brands of German origin in the wake of the Volkswagen scandal. This could occur because investors will observe negative online chatter on social media and infer that such chatter will affect the future sales and earnings of the firm.

As gathering such online chatter is a time-consuming task, I used Google search data to observe if there was any association between the search patterns of Volkswagen, Daimler and BMW during the Dieselgate scandal. As can be observed from figure 3, there was an increase in search for all three brands, with Daimler having an increase on September 22nd and reaching its peak on September 24th, while BMW reached its peak on September 24th.chart3

Overall, it seems that consumers are using country-of-origin in their perceptions of car manufacturers, and that investors are using their own and other consumers’ inferences to make their investment decisions.

Social media matters a lot.

I have one piece of advice for German brands: for now, at least, be wary of emphasizing that you’re “made in Germany.”

SalesMark Summit 2015

The Center for Sales and Marketing Strategy Advisory Board member panel at the SalesMark Summit
The Center for Sales and Marketing Strategy Advisory Board member panel at the SalesMark Summit

The University of Washington’s Center for Sales and Marketing Strategy hosted the first ever Sales and Marketing Summit (SalesMark Summit) on September 17, 2015. With over 160 attendees, the conference was the largest the Center has hosted. Attendees represented companies ranging from small local businesses to global firms.

The SalesMark Summit was designed to give participants the latest insights in sales and marketing research, and help them apply it in a useful way to their respective companies. Presenters included business leaders from local companies, academics, and the Center for Sales and Marketing Strategy’s affiliated researchers.

Pam Greer, a board member of the Center for Sales and Marketing and the Vice President of Global Consumer and Partner Insights at Starbucks, spoke about “Looking Forward at Consumer Insights and Trends,” and the different methods Starbucks uses to learn more about their customers. Starbucks is motivated by a “love of customer,” the driving force in their marketing decisions.

Elissa Fink, CMO of Tableau Software, and Abhishek Borah, PhD, Social Media Researcher, Foster School of Business, gave a presentation on “Business and Academic Insights on the Effectiveness of Social Media.” Dr. Borah talked about his research in social media, and metrics firms can use to measure social media effectiveness, which complemented Elissa Fink’s demonstration of how to use Tableau Software and gain deeper insights from social media data sets.

Kelly Martin, PhD, Colorado State University and Rob Palmatier, PhD, Foster School of Business talked about “Managerial Insights from Recent Academic Research.” Dr. Kelly Martin gave a presentation about data breaches and privacy policies, illustrating the paradox of consumers putting a high priority on their privacy, but also doing little to protect their own information and giving it out to companies easily. She offered solutions for companies for how to best manage customer data and privacy concerns. To minimize the impact of a data breach, companies should be transparent about their loyalty programs and give customers opt-out options.

Dr. Palmatier spoke about the latest research in customer engagement strategies and loyalty programs. He gave the example of airline loyalty programs, which work using two different mechanisms: gratitude and positive status for those receiving the reward, and unfairness and negative status for bystanders. Companies must recognize that both these mechanisms are at work on any loyalty program and measure them to determine the effectiveness of a program. For example, when certain customers are given priority boarding, the bystander effects of unfairness and negative status are larger than the positive effects, making this aspect of a loyalty program relatively ineffective.

Finally, the Advisory Board members of the Center for Sales and Marketing Strategy held a panel and allowed the audience to ask them questions about the presentations or about any business problem. Board members include representative from Accenture, Alaska Airlines, Boeing, Esterline Corp, Microsoft, Nordstrom, Philips Healthcare, Premera Blue Cross, Starbucks, and Tableau.

The SalesMark Conference concluded with a networking reception held in Anthony’s Executive Forum.

Learn more about the Center for Sales and Marketing Strategy and its events here.

Food delivery in Shanghai and a discussion on cultural differences

Guest post by Emily Su, Foster undergraduate, studying marketing and pursuing a Certificate of International Studies in Business. She studied abroad in Shanghai, China this summer 2015.

IMAG5349The story that best highlights my international experience is not a story that’s groundbreaking, daring, or jaw-dropping. But, it’s a pleasant and humbling story that is life-changing and something I’ll never ever forget.

We are all aware that there are striking differences between Chinese and American systems. Chinese views on politics, economics, social class, independence, and freedom (just to name a few) are drastically different. Going into my study abroad experience, I did not expect to have the opportunity to talk with locals about politics and social issues. In China, these issues are sensitive. Often, they are a big no-no for open discussion.

One day, my Chinese roommate and I were deciding where to eat lunch—at the cafeteria? The food court at the neighboring mall? A noodle restaurant ten minutes away? Before we had decided –  thanks to typhoon season in Shanghai –  a torrential downpour began outside. So much for a lunch date outing. Immediately, my Chinese roommate pulled out her phone and showed me an incredible App, 美团外卖 (Mei Tuan Wai Mai), that featured thousands of restaurant selections nearby. They all had built-in speedy food delivery services. When she told me that food delivery in Shanghai is often cheaper than dining in, my eyes lit up. I knew I had discovered something amazing. We ordered multiple flavors of dumplings and within 30 minutes we were eating to our heart’s content in the safety and protection of our dormitory.

I kept gushing about the food delivery system in Shanghai, since America seems to be a little behind on this trend. This sparked one of the most genuine, interesting, and meaningful conversations I have ever had. Despite my expectation of avoiding political topics, my roommate initiated the discussion of some political issues. We talked about an array of topics, from gun laws to voting, from traffic laws to pollution. We discussed differences in entrepreneurship and corporate tax. What started off as curious conversation about voting, became an exciting and enjoyable exchange of perspectives, experiences, and questions. I found myself asking more questions than giving answers. I never thought I could ask so many questions at once, and I never thought anyone could be that curious about my home country. I could probably have written a book about all the things I learned that day about differences in Chinese and American culture.

I absolutely love to discuss differences in cultures. I like to observe, and so almost everything I experienced in Shanghai, I would compare to the American version. Comparing cultures and seeing the huge differences in daily life is mind-blowing. Chinese people may cook completely differently, interact with friends differently, or even wash their clothes differently, but it somehow works. Different societies, whether it be because of political/economic/geographic/social differences, just have different ways of getting the job done. That’s what I’m fascinated about. I learned that there is no one culture that is the best or the greatest in all aspects. Learning more about another country has helped me realize this.

My ancestors are from China. I was born and raised in America. This study abroad experience was a wonderful way for me to bridge the gap, to understand the meaning of and be the representation of Chinese-American. This is exactly what I needed to pursue my career in international business. And, the bridge will only become shorter and shorter.

Foster students take Brazil

This post was written by EY Campus Recruiter Melissa C Boroughs.

Foster students in Brazil
Foster students tour the International Olympic Headquarters and learn the meaning behind the 2016 Rio Olympic and Paralympic 3D logos

This past August, five UW Foster students traveled to Rio de Janeiro, Brazil, with EY as a reward for winning the EY Beam Abroad Advisory case competition. Each year EY hosts a campus case competition on several west region university campuses. The winning team from each campus is invited to participate in a regional competition in Los Angeles, CA. The winning team from UW beat 8 other local UW teams as well as 7 other west region schools in LA. The team was awarded $6,500 as well as a trip to Rio for five days. While in Rio, the team spent two days sightseeing the Christ Redeemer Statue, Sugar Loaf Mountain and famous beaches such as Copacabana and Ipanema. The group visited the EY Rio office and spent the afternoon at the International Olympic Headquarters as EY is an Official Sponsor of the 2016 Rio Olympic and Paralympic Games. This trip was meant to help show students EY’s Global brand as well as immerse students in a different cultural experience.

See more photos below:

Foster students in Brazil
UW YEOC mentors visit the EY Rio office.
Foster students in Brazil
Foster students in Brazil The group spent the day sightseeing Rio and visited the famous Sugar Loaf Mountain.
Foster students in Brazil
Foster students visit the EY Rio office and learn more about what EY is doing to prepare Rio for the 2016 Olympic and Paralympic games.





























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Working with Millennials

David Gilluly, Makenzie Kruger, Rick Carter and Jean Blatchford
David Gilluly, Makenzie Kruger, Rick Carter and Jean Blatchford

This past Friday, September 17th, Foster Professional Sales Program was invited to speak in front of top sales executives from the area on the topic of Leading Millennials in today’s workforce. As the Assistant Director of The Foster Professional Sales Program, Rick has dedicated the past year to mentoring and shaping the next generation of Sales Leaders in the Pacific Northwest. Accompanying Rick to the event was a panel of three, including Foster Professional Sales Program’s very own: graduate and Account Manager of Microsoft, Jean Blatchford and two current students at the Michael G. Foster School of Business, David Gilluly and Makenzie Kruger.

The session consisted of a brief introduction by Rick on the Millennial generation and was followed by an insightful series of questions asked by Rick to the three panelists. Members of the Seattle Executive Sales Network Group were able to ask the panel follow-up questions, leading to an intriguing conversation amongst the group. Nancy Truitt Pierce, Executive Director of the peer group commented, “I look forward to seeing where the three of you stunning young executives end up.” A true showcase of what the Foster Professional Sales Program has to offer.

Consulting: A path to greater expectations

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Sora Yi with client Synthia Melton, owner of Dimension Law Group.

Sora Yi, Foster BA, Class of 2017, talks about how her internship at the Consulting & Business Development Center exceeded her summer expectations.

Before embarking on my summer internship at the Consulting and Business Development Center, I was anxious to learn what lay ahead. Coming previously from a science track background, I hardly even knew what consulting entailed. I imagined myself working closely under supervision and maybe even being micro-managed. However, I learned early on that this would not be the case.  The expectations that I had coming in and the reality of the internship could not have been more different.

What I did not expect was how much of an impact that I could make on the three businesses that I was assigned. It was amazing to see the level of trust and professionalism given to me as a student intern by some of the most passionate entrepreneurs I have ever met. All of the meetings, project deliverables, and long hours put into these three companies have turned into actionable  recommendations that have been implemented by these three businesses, which is a very, very rewarding feeling.

What I did not expect was the network of professionals that I gained and the support that they provided me through this consulting internship.  I had the opportunity to work with professional advisors from three very different industries who helped me throughout my projects and contributed to my own personal and professional development.

What I did not expect was the new support system I gained through my fellow student peers and the staff at the Consulting Center. I was so lucky to work alongside other supportive and hardworking student interns. Additionally, I am lucky to have been able to work under supervisors who are so passionate about the mission of the Center and value the learning experience of the interns.

Ultimately, what I have gained this summer is a new found passion for consulting, a new found sense of confidence, and a whole new network of people of whom I am so fortunate to have worked with. I would recommend any student who is even remotely considering pursuing consulting to apply to any of the various programs that the Consulting and Business Development Center offers.  For my clients, the culmination of my work this summer lead to recommendations that I hope will bring them large dividends.  For me, the extensive personal and professional growth that I’ve gained through this experience cannot be quantified.


Foster MBA class explores entrepreneurship through the investor’s eyes

susan-preston1713-XLHow to be a better entrepreneur? You might start with understanding what investors are looking for.

That’s the insight behind the Foster School’s distinctive Angel Investing course, a year-long practicum offered to a select group of advanced MBAs by the Buerk Center for Entrepreneurship.

Actually, practicum may not be strong enough a word for what occurs over the course of this immersion into the world of early stage entrepreneurial investing.

It begins in the classroom with the principles of investing and how to spot a viable startup team, opportunity and technology. And then pairs of students embed with one of seven Seattle angel groups. Alongside the pros, they hear pitches, perform the due diligence, and eventually invest real money, on behalf of the University of Washington, in one or two startups that show the most promise.

This year, the class invested $50,000 in C-SATS, a Seattle startup using online crowd-sourcing to accurately and inexpensively assess, via video, the skill of surgeons and other medical practitioners.

The point of the class, though, is not only to make money on an early stage investment or two.

“A principle I teach is that if you want to be a successful entrepreneur, you have to understand your market and your audience,” says Susan Preston, the Buerk Endowed Fellow for Entrepreneurship at Foster. “One of your first audiences is investors. So we try to understand how they think when they’re considering an investment. The learning curve is massive for everyone.”

Expert instructor

susan-preston1678-XLIf you engineered the perfect instructor for such a course, you’d come pretty close to Preston. A general partner of the CalCEF Clean Energy Angel Fund and managing member of the Seattle Angel Fund, Preston is also co-founder of the nation’s first all-women angel investing group (Seraph Capital), an advisor to the National Science Foundation, a former entrepreneur-in-residence at the Kauffman Foundation, author of two books on entrepreneurial financing, and architect of a pending federal bill on private equity investing.

“I’ve been living and breathing this for almost two decades,” Preston says.

A self-described opportunistic risk taker, she jumped at the chance to take over this unique course created and taught at Foster for its first two years by Robert Wiltbank (PhD 2003), a professor of strategy and entrepreneurship at Willamette University and partner at Montlake Capital.

Preston has been energized by her first year teaching the class.

“I really enjoy the students and their energy,” she says. “They are demanding, because they want to get their money’s worth out of every credit. And I deeply respect that. It’s wonderful to see that level of interest and commitment.”

Interest and commitment

Esther Perman (MBA 2015), a member of last year’s class, typifies that entrepreneurial zeal. She was a UW Business Plan Competition finalist, a Gates Fellow in Innovation and Entrepreneurship at the Technology Alliance, president of the Foster School Entrepreneurship and Venture Capital Club, and runner-up at the International Venture Capital Investment Competition. “Entrepreneurship is pretty much where I planted my flag,” says Perman, who came to Foster from a biofuel startup and hopes to leverage her education into a startup of her own someday.

She was in good company. “Most of us in the class aspire to either start or work for an early stage company,” says Greg Akselrod (Evening MBA 2015), a Microsoft program manager with entrepreneurial ambitions. “We saw the class as an opportunity to view entrepreneurship from the other side. By seeing how investors react to so many different entrepreneurial pitches, we learned to pattern match to see, oh, this is what they’re looking for.”

For Kate Thorson (MBA 2015), whose background is in global health, the Angel Investing class brought to life all of the core components of the Foster MBA. “By interacting with entrepreneurs and evaluating real companies from an investor perspective, we learned to grasp the whole picture of a business—from the broader economic context and the contours of the individual industries to company strategies, financial viability and makeup of the team,” she says.

“…With actual investment on the line.”

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