Category Archives: Faculty Perspectives

Bruce Avolio TEDx video: showing up for leadership

Bruce Avolio, executive director of the Foster School’s Center for Leadership and Strategic Thinking, spoke at TEDxUmeå on January 17, 2013. The theme was “Leadership, creativity and innovation” and Avolio’s talk was titled, “Showing up for leadership…Ta Dah!” In his talk Avolio discusses three types of leadership: leadership that grows people, leadership that sustains people and leadership that diminishes people.

When a leader grows people, she empowers them to take ownership and challenge conventions. Leaders who grow people share a common trait—they all had people in their lives who set extremely high expectations for them. When they failed to meet these expectations, they were supported and encouraged to get up and do it again, and this process was repeated over and over. As a result they developed the ability to transform other people into leaders.

Avolio shared examples of how people can show up for leadership. You can be a leader who grows people by:

  • Showing up with great expectations.
  • Showing up claiming leadership.
  • Showing up over and over.
  • Showing up with everyone.

Avolio said, “We can all grow a better world together. Why don’t we do it?”

Watch the 20-minute video.

Foster finance workshop explores the ABCs of HFTs

Guest post by Jonathan Brogaard, an Assistant Professor of Finance at the Foster School

Jonathan BrogaardIs high frequency trading good or bad for financial markets? In January, the Foster School Department of Finance and Business Economics hosted a high-level summit to discuss how the increasing automation of financial markets is affecting investors, market volatility and order execution.

The discussion brought together Foster finance faculty and senior executives from local investment firms.

As an early investigator of this emerging topic in finance, I was asked to present the leading academic findings.

First, a bit of definition. High frequency trading (or HFT) is the fastest subset of computer-based algorithmic trading. HFTs act either as market makers or exploit inefficiencies in the market. They buy and sell constantly, hold very little inventory at any given time, and end each day with zero positions. In short, they run a volume business, picking up fractions of a penny over and over and over again. This leads to regular—and sometimes extravagant—profitability.

But HFTs are shrouded in mystery. Little is known about these firms and their algorithms that dominate market trading. HFTs are obtuse and generally unregulated. And they have been linked to scary events such as the flash crash of May 6, 2010.

A small group of academics, including myself, study the effect of HFTs on market quality—how well markets operate. The consensus of our findings is that, on average, HFTs are improving the quality of markets. That is, they are adding to price discovery (making prices more informative), increasing liquidity (making more shares available to be bought and sold), and decreasing spreads (the price difference between what a buyer and a seller will pay).

But what are traditional investors experiencing in the markets? Our workshop guests voiced a variety of opinions on HFTs, and shared experiences that will help me and other researchers fine-tune our measurements to better reflect the realities of an increasingly computerized market.

We certainly share their concerns about the lack of understanding around high frequency trading. We have much to learn. Do HFTs increase or decrease the risk of flash crashes? What is their presence doing to investor confidence? Are they beneficial in the market for smaller stocks?

We tend to fear what we don’t know. But high frequency trading is certainly here to stay. So we’re working diligently to shed light on this powerful new force in the financial markets.

Jepson School 20th anniversary

Guest post by Bruce Avolio, Executive Director of the Center for Leadership and Strategic Thinking and Marion B. Ingersoll Professor of Management

image003

I recently attended the Jepsen School’s 20th anniversary celebration in Richmond Virginia. The Jepsen School was the first school in USA to focus specifically on leadership as an undergraduate major as its main thrust and did so taking a broad humanities perspective. They have now graduated over 1,000 students who approach leadership with a very, very broad mindset from the great books of literature and history to the R.O.I. focus of corporations.

During one presentation at the conference, we talked about a program called Shakespeare Behind Bars. From its website, “Now in its 18th year, Shakespeare Behind Bars is the oldest program of its kind in North America. SBB programming serves incarcerated adults and youth using exclusively the works of William Shakespeare.” So try to imagine someone from the African American gang in a correctional institution working with someone from the white supremacist gang on Hamlet. That is exactly what happens, and this program has participants with a significantly lower recidivism rate, lower rate of violence and infractions, etc. So next time someone is in a brainstorming session with you, and they suggest something so out of the range as Shakespeare Behind Bars must have been when it was first proposed, I suggest you suspend your judgment!

Avolio in Australia: a powerful reminder

Guest post by Bruce Avolio, Executive Director of the Center for Leadership and Strategic Thinking and Marion B. Ingersoll Professor of Management

The picture is of an empty and very long table on South bank in Melbourne. The organizers wanted to send the message that a lot of folks would go without a holiday meal if folks didn’t donate to help out. What a powerful symbol…empty table with lots and lots of seats needing to be filled.

Leadership in Peru

Guest post by Bruce Avolio, Executive Director of the Center for Leadership and Strategic Thinking and Marion B. Ingersoll Professor of Management

Recently on a trip to the Ivey School of Business in London, Ontario, I was asked, “how does one lead when they are not sure where they are going?” Many might say, just watch our U.S. politicians if you want to see how! More seriously, the more dynamic environments become, the more likely leaders are going to need to lead not knowing exactly where they are headed. As I thought about this question I went back to a recent trip I had taken to Peru. Peru is one of those South American economies that is shedding its past – recent past in terms of military dictatorships – and growing at a healthy clip, at least for the more educated class in places like Lima. Peru has a rich history that dates back well before many of the world’s other well-known societies, starting with the Incas which are considered one of the modern ‘older’ civilizations. There are two civilizations that pre-dated the Incas going back at least 5,000 years.

As Peru accumulates wealth, it is now able to invest in discovering its past. It is not an overstatement to say the Inca culture, traditions, food and history are becoming an economic force in Peru. Just see Machu Picchu and you will understand what I mean. This is one of the most amazing cities built by the Incas high atop a mountain that is one of the true wonders of the world. Going to Peru and its many historical Inca sites, taught me a lot about how advanced this society was. For example, the Incas knew which foods to eat that had low cholesterol, they knew how to build structures to withstand earthquakes, and they knew how to do brain surgery. And the answer to that question posed to me in London, Ontario lies in how the Incas built buildings. They built buildings by seamlessly integrating them into the rock upon which they were built. The Incas saw mountains as sacred. Rather than dig a big hole and then build the foundation, they built the building into the existing foundation, which took more time and care, but as we can see, lasted longer. This was the case for all buildings throughout Peru, ranging from temples to residences for Inca workers.

How does the Inca foundations help me answer the Ivey question? One must build an authentic foundation for leadership on which the rest of the structure can be created. We see organizations that have no ‘firm or genuine’ foundation, no core values and therefore no solid basis to lead into an unknown future. Many times we have to go backwards in order to move forwards and answer where we are going, which in this case is into the unknown. And I promise I will avoid writing a pop book “7 glorious Inca Principles of Effective Leadership.”

Followership impacts leadership

Gerard Seijts interviewed Bruce Avolio, professor of management and executive director of the Center for Leadership and Strategic Thinking at the Foster School, about his research on leadership. Professor Seijts is executive director of the Institute for Leadership at the Ivey School of Business. In the interview he asked Prof. Avolio what are the big leadership questions that will advance the field.

According to Prof. Avolio, one major question is, “Is the source of leadership followership? If so, in what way?” He goes on to say this isn’t a topic we have delved into because we assume the source of leadership is the leader. But a key discovery in Prof. Avolio’s research is that followers who have a sense of ownership in their work, don’t let their leaders go off the cliff or in other words, make poor decisions.

He also said he can tell a lot about an organization’s leaders without ever meeting its leaders. This is because followers are a reflection of what they see in their leaders. “If followers are independent, willing to challenge, feel safe to do so, own what they are charged with, and feel a deep sense of making it right, they change the leadership lens of the organization.”

Another takeaway from this interview is Prof. Avolio’s finding that financial analysts consider a firm’s leadership when valuing a firm. They can discount a firm anywhere from 5% to 20% based on their perceptions of its leadership.

Watch the full interview.

Emer Dooley TEDx video: entrepreneurship education – an oxymoron?

University of Washington Foster School of Business lecturer and alumna Emer Dooley (MBA 1992, PhD 2000) recently gave a TEDx lecture on entrepreneurship. Her topic? Top five skills we can learn from entrepreneurs who build successful, enduring companies.

“That great business philosopher Confucius said, two thousand years ago, ‘What I hear, I forget. What I see, I remember. But what I do, I learn.’ And that’s what entrepreneurship education is all about,” says Dooley.

Watch the 17-minute video and catch lecture highlights below.

Top 5 skills  of a successful entrepreneur:

  1. Do something. Try something. Many successful entrepreneurs have been fired or let go from a former employer and have to act quickly to pay bills. So they start a business without having written a formal business plan, but have a sketch on the back of a napkin.
  2. Beg, borrow or convince people to give or loan resources. Entrepreneurs must figure out how to get resources, assistance and seed funding.
  3. Embrace surprise. Juggle the unexpected and shift gears quickly by seizing opportunities.
  4. Minimize the downside of risks. Great entrepreneurs do not take huge risks. They reside in a state of “heads I win, tails I don’t lose too much” in starting a new business.
  5. Be an effectual thinker. Through entrepreneurial education, emerging entrepreneurs learn to realize they are the pilot-in-command. They are running and starting a business and by trying a business idea out, they may fail. But they will learn from mistakes and can continue moving forward.

More entrepreneurship advice, insights from Emer Dooley’s TEDx lecture:

“Entrepreneurial thinking is a way of looking at and thinking about problems, but very much about doing something about problems.

“There’s this myth about entrepreneurship. Who pops into your brain? It’s Gates or Bezos or Richard Branson. But there is no one type of person that’s an entrepreneur. When I think about the characteristics of an entrepreneur, they can be incredibly gregarious. They can be really shy. They can be these big, big picture thinkers or they can be these obsessive control freaks.

“If you’re a loud-mouth like Ted Turner, it’s natural. You’ll start CNN. If you’re a geek and you’re afraid to approach girls directly, what are you going to do? Start Facebook. If the only way to be an entrepreneur was to be born one, Colonel Sanders would never have started Kentucky Fried Chicken when he was in his 60s and on Social Security.

“There’s the strategic approach or the entrepreneurial or affectual approach. An affectual entrepreneur is someone who thinks they can affect their own world. What can I do with the resources I have at hand? Not, what is the end goal and how do I get there?”

After 11 years of teaching entrepreneurship to UW business, engineering and computer science students, Emer Dooley now serves as strategic planner, board member and faculty advisor for the UW Center for Innovation and Entrepreneurship.

Marketing failure: iPhone in India

Guest post by Shailendra Jain, associate professor of marketing, UW Foster School of Business

iphoneApple has been called “the most admired company in the world.” There are some good reasons for this. Apple is very innovative, very cool, very personality-oriented.

But while Apple’s iPhone has achieved landmark success in the United States and redefined the smart phone category, it has so far struggled in two of the world’s largest markets. The iPhone has yet to create much interest in India and is, at best, a fledgling brand in China.

It has not met the success in these markets that Apple expected for a variety of reasons.

First is a technology issue. In India, the market I’m most familiar with, the iPhone has compatibility issues. That’s an amazing thing to ignore. Your product has to be aligned with the context in which you are marketing it. Apple, reportedly, is in talks with carriers in China and India to overcome this compatibility issue and is believed to be launching an iPhone with CDMA technology, which is compatible with Chinese and Indian telecom standards. It will be interesting to see whether this enables Apple to capture a larger chunk of these two enormous markets.

Second is a pricing issue. At its introduction, an iPhone cost about the same price in India as it did in the U.S. (about $700). But the way consumers process price information is interesting. In India, many potential customers reasoned that for the price of three iPhones they could buy a Nano car. And they were not sure if this was a good trade off. For these consumers, Apple may have gotten the price wrong. They may have ignored the how people in these countries process price information.

A third reason is that people in India are used to an unlocked phone. Apple does not want people to buy unlocked versions of its phone. But the moment there is a gray market where people can buy another compatible version of the iPhone, Apple will be challenged.

A fourth reason—and this is personal speculation—is a misalignment of “softer” brand attributes. What Apple as a brand means in the U.S. is very different from what Apple means in Asian countries. It was born in the U.S. and has produced a long line of successful “i” gadgets—iMac, iPod, iPad—whose branding is rooted in individuality. This is clever branding, and has been a good fit for an influential segment of the American and Western population: rebels, early adopters, would-be innovators who want cutting-edge technology and are relatively less sensitive to price. In Asian countries this is not such a strong fit, in terms of perceived personality. Asian cultures tend to be more collectivistic, and the theory is that millions of consumers in these cultures may find “i” less appealing than “we.”

For the iPhone, a whole set of factors converge to the same outcome. And I think this is typical of marketing failures. Rarely is it the fault of one or two factors. Usually it’s a complex confluence of multiple factors—product design, pricing, revenue model, distribution, promotion, branding, competition. Underestimating your weaknesses or overestimating your strengths. More often than not, multiple factors feed into most marketing failures.

See 15 Cautionary Tales: Failed Marketing Campaigns for more information.

Marketing failure: New Coke

Guest post by Dan Turner, senior lecturer in marketing, associate dean for masters programs and executive education at the UW Foster School of Business

newcokeNew Coke is—for my money—the most epic new product fail in marketing, more so than the DeLorean, Apple’s Lisa and Newton, Sony’s Betamax, and even the Edsel.

Many people have selective memories about the Coca-Cola Company’s decision to launch the product and the initial consumer reaction. Coke’s market share had been falling for years, and consumers overall expressed a strong preference for Pepsi over Coca-Cola in blind taste tests. The new, improved, sweeter formulation of Coke tested extremely well, with more people preferring the New Coke formula over both “old” Coke and Pepsi.

In a naïve way, it made perfect sense for the Coca-Cola Company to improve their product, making up for a known deficiency versus a focal competitor. In fact, sales analysis trends immediately following the product launch showed significant gains for the Coca-Cola Company. In informal blind taste tests, Seattle retiree Gary Mullins, founder of Old Cola Drinkers of America, failed to distinguish between old and new Coke or expressed a preference for the latter.

Of course, we know the rest of the story. The public revolt ensued shortly thereafter, and it had little to do with the taste of the soda. In launching the new version of Coke, the Coca-Cola Company had a made a fundamental error in forgetting the source of the value it was truly offering consumers.

A soda that tasted good was nice, but Coca-Cola really offered value on the basis of its strong, favorable, and unique brand associations: America, friendship, nostalgia, and the like. In changing the formula, the company walked away from all of these sources of value, and customers reacted strongly, emotionally, and in a predictable fashion.

The silver lining for the Coca-Cola Company rested in the fact that the re-introduced product, Coca-Cola Classic, created a firestorm of marketing communications activity, reminding consumers why Coke was so great in the first place and dramatically communicating the value of the brand.

See 15 Cautionary Tales: Failed Marketing Campaigns for more information.