Student Turns Scholar

A former Foster student’s undergraduate exposure to behavioral research has led to a promising academic career

Mercurio
Katie Mercurio

Serving as an experimental subject in the Foster Behavioral Lab may not be the highlight of every undergrad’s experience. But Mark Forehand, a professor of marketing at the Foster School and architect of the lab, believes it’s appropriate for students to contribute to the research mission of the University of Washington.

“It’s great to have subjects to run our experiments on,” he says. “But it’s also important to expose students to the process of research.”

And every so often, it clicks with someone.

Like Katie Mercurio (BA 2004, MS 2006, PhD 2010). One of the earliest students conscripted into behavioral studies in the old Balmer lab, she found herself subject to a particularly fascinating experiment on the effect of celebrity voiceovers on consumer brand attitudes.

The experience inspired her to seek a research apprenticeship with the study’s principal investigator—Forehand. Mercurio began analyzing data and eventually started running some experiments. While continuing studies in the Foster PhD Program she ran the entire Balmer Lab during construction of its new home just next door.

“I was involved in the Behavioral Lab almost from its start,” she says. “And there has been a huge evolution terms of students participating and the number of studies. It just keeps growing.”

After Foster, Mercurio did a post-doc stint at UCLA before becoming an assistant professor at the University of Oregon. She teaches the voiceover study in one of her courses. Her research specialty is in social identity, a topic she first studied as an undergrad. And, like a growing diaspora of Foster grads, she runs a behavioral lab at her current business school.

She notes that the Foster Behavioral Lab is a two-way force. Its graduates disseminate knowledge and expertise to other universities while scholars trained elsewhere gravitate here to work in it.

“To get the best faculty you have to have the best facilities. And you have the best facilities here,” Mercurio says. “You are attracting the best talent in behavioral research because of that lab.”

Read more about the Foster Behavioral Lab.

The Carletti Expedition–Prologue

Guest post by Wilson Carletti, recipient of the Bonderman Travel Fellowship (read more about the fellowship and Carletti’s backstory here).

Wil Carletti I do not think there is necessarily a definitive “line,” that we cross and magically become adults; however, as I look around, I watch my best friends, acquaintances, family, co-workers (real, intelligent human beings) crossover from being merely faces in the crowd to the ones standing onstage. Better yet, they’re not just standing, they are dancing, celebrating, creating beautiful art, expressing themselves. They’re winning PAC-12 championships (and IMA championships), creating clothing lines, moving to faraway places, building companies, designing products, and literally saving lives. They are starting non-profit organizations, they’re becoming doctors, lawyers; they’re pushing their limits, as well as those around them. As I stared out the airplane window—the sun had just set behind Managua—I began to think about just how far I was about to push my own limits.

After landing and standing in line at customs, I found the shuttle that would take me to Granada. At this point, darkness made it difficult to take in much of the scenery, so I chatted with the driver a bit. While it seems as though Nicaragua takes the lines on the road a little more seriously than drivers did in China (I participated in an Exploration Seminar there), it took me awhile to get used to. I kept noticing buses with bright, blinking, colorful lights all over the front end – I asked the driver what that was for. Apparently it’s legal in Nicaragua, so why not? “You should see this place during Christmas time – the entire road looks like a Christmas tree,” he exclaimed.

We made it safely to the hotel, and, as I sat there, about to embark on the adventure of a lifetime, I decided I would write to reflect on what was. I would write to grow, as I explore what will be. And I would write to inspire others to pursue what could be.

Of all the paths I described above, none is more worthy than the other; you do not have to be an astronaut or rock star (or go on an 8-month long adventure for that matter) to make a positive difference in this world. Find something that you are passionate about and share it with those around you. Find your stage.

I felt excited to try to find my stage over these next eight months. While I definitely felt nervous, I was pleasantly surprised by how calm I was. I have been thinking about this for months now, and finally, I was ready.

The next day, when I awoke in my warm, humid hotel room in Granada, I felt like I had woken up from a long dream. I was a bit anxious – I knew no one and I was far away from home. Finally I strode confidently out onto the cobblestone street.

Adapted for the Foster Blog with the help of Wilson Carletti. More episodes to come. Follow his unabridged journey here.

Take it from T.A.

T.A. McCann speaks to an Entrepreneur Week audience about networking
T.A. McCann speaks to an Entrepreneur Week audience about networking

We’ve heard it said a million times: “It’s all about who you know.” Whether you’re looking for a job, talent to join your startup team, or investors to fund your great idea, leveraging your network will help you achieve your goals. But how do you go about building a strong network? To answer this question, we turned to rockstar entrepreneur T.A. McCann, the founder of Rival IQ and Gist, which he sold to Blackberry in 2011. McCann is an active angel investor, a startup advisor, and a former America’s Cup winner. He is also a master networker, and attributes much of his success to the power of connection. In his words, “Your success is directly correlated to the size and strength of your professional network.” McCann joined us during Entrepreneur Week 2014 to share some of his best networking advice. We’ve included a few of our favorite tips below:

  • Do your homework
    If there’s someone out there you’d like to meet, do your research. A few years ago, McCann was headed to a conference where he knew he’d have the opportunity to connect with Brad Feld, “one of the best investors out there.” McCann did his research, and found out that Feld is a runner. He reached out to Feld via twitter with a simple note, saying “I know you’re a runner, and I’m hoping to run while I’m at this conference. Can you recommend any good places to run while I’m there?” Feld got back to him and suggested the two of them meet up and run together. So they did. Feld ultimately ended up leading the series A financing of McCann’s company, Gist. “All because I did the research to figure out who this guy was and what he cared about,” says McCann.
  • Add something of value, and give before you get
    Great networkers ask themselves, “What can I do for this person?” before they ask, “What can this person do for me?” If you’ve found someone you’d like to add to your network, do your research, ask questions, and learn what’s important to them. Once you do this, share something of value with them. This might be an opinion, relevant information, or a new connection. “Think about how you can give something that’s going to help the other person first. If you give first, you’re much more likely to get in the future,” says McCann.
  • Get involved
    “Volunteer your time,” says McCann, “and you’ll make new connections at the same time.” McCann spends a lot of time sharing his experience and ideas at Startup Weekends, where he’s constantly exposed to fresh ideas and smart people to add to his network. “Startup Weekend is a kind of competition,” he says, “but it’s much more about building skills and meeting people.”

Want more networking advice from T.A. McCann? Check out his slides here.

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InTheWorks: Minimizing Motor Emissions

IntheWorks CTO, Todd Hansen (left) with CEO David Endrigo.
IntheWorks CTO, Todd Hansen (left) with CEO David Endrigo.

“I didn’t really expect to start my own business,” says Todd Hansen, looking back to his time as an undergraduate studying biochemistry at the University of Washington. But he had always been interested in clean technology and the reduction of fossil fuels, so when he discovered a really interesting concept for reducing emissions, he decided to pursue it. “Lo and behold,” says Hansen, now the co-founder and CTO of InTheWorks, an engineering and design development company, “that concept turned out to have a lot of potential.”

InTheWorks’ patented product is “essentially a unique emissions control system,” says Hansen. The company holds a total of 4 patents on a catalytic converter that can be used with any type of gasoline-fueled internal combustion engine to significantly reduce emissions, increase fuel economy by 4% to 5%, and increase horsepower 4% to 6%. And where other ways to improve fuel economy and power (aerodynamics, tire redesign, weight reduction) are costly, installing InTheWorks’ converter actually lowers manufacturing costs by 12%, due to reduced precious metal content.

InTheWorks’ technology was impressive from the get-go (the company won a prize in the 2009 UW Environmental Innovation Challenge by focusing on marine engines), but it’s in the past few years that Hansen and his team—CEO and co-founder David Endrio and executive vice president John Gibson—have seen tremendous progress. In 2011 InTheWorks’ prototype passed both EPA and CARB tests with flying colors, and further, more extreme testing in 2013 validated the 2011 results. The company has three full time employees, has raised $1.5 million in funding, and recently formalized a partnership with ClaroVia Technologies (known for its OnStar vehicle navigation system).

So what’s next for InTheWorks? “We’re primarily focused on licensing our technology,” says Hansen, “and we’re ready to reach out to OEMs [original equipment manufacturers] and Tier 1 suppliers.” At the same time, InTheWorks plans to pursue in-house manufacturing and distribution of marine applications of its technology. “And we’re always looking for additional technologies to add to our portfolio,” says Hansen, so his focus is already on the next innovation: “Diesel is on the horizon,” he says, “and we’re optimistic that we will be noticed by game changing companies.”

WCRS: Improving Entrepreneurship Education

Entrepreneurship education is in demand. In fact, it’s one of the fastest growing subjects on today’s college campuses. According to a 2013 paper published by the Kauffman Foundation, only 250 entrepreneurship courses were taught in the United States in 1985. By 2008, that number had ballooned to 5,000. Today, over 9,000 faculty members teach at least one course in entrepreneurship and more than 400,000 college students take classes on the subject. As the number of future founders and entrepreneurs taking these classes continues to grow, it is crucial that faculty deliver the best possible content, developed from cutting-edge research. Enter the West Coast Research Symposium on Technology Entrepreneurship, an annual conference that brings together scholars from major universities to share their latest insights into the world of innovation and entrepreneurship.

WCRS faculty and PhD students share ideas over dinner.
WCRS faculty and PhD students share ideas over dinner.

In early September, 79 faculty and PhD students from across the U.S. and overseas gathered for the 12th annual WCRS, held at the UW Foster School of Business, to collaborate and gain valuable feedback on novel research in areas such as nascent markets, technology innovation, and funding. This sharing of ideas often leads to stronger, more robust research that will soon find its way into hundreds of college classrooms. When Abhishek Borah, assistant professor at the UW Foster School of Business, presented his paper on social media’s impacts on IPO underpricing, his premise was that underpricing was something that underwriters, investors, and firms all want to avoid. However, faculty members from the University of Alberta and Santa Clara University encouraged him to avoid a purely finance-based view of IPO underpricing and probe deeper into the motives of the bankers involved in the process, to better understand how different types of actors impact IPO pricing.  Feedback like this results in more sophisticated research, increasing the likelihood of publication in top-tier journals, and ultimately improving the education of the next generation of entrepreneurs.

A key element of the WCRS is a one-day doctoral workshop, held prior to the conference, that provides an opportunity for PhD students in entrepreneurship to present their research interests, learn what goes into quality research, and gain wisdom from leading scholars in the field. This workshop preparation is invaluable for PhD candidates. As Suresh Kotha, professor at the UW Foster School of Business and one of the leaders of the WCRS, explained: “Many of the faculty presenting this year attended the conference as doctoral students. It was wonderful to see how they’ve blossomed into successful and confident faculty members.”

The West Coast Research Symposium and Doctoral Workshop are sponsored by the University of Washington, Stanford University, University of Oregon, University of Southern California, and University of California Irvine, with a grant from the Ewing M. Kauffman Foundation.

Checking in on YEOC: The October Session

For most, a pep rally followed by a mentor meeting, a college-prep workshop, and a talk on the power of networking with the Email Marketing & Promotions Coordinator for the Seattle Seahawks sounds like an action-packed day. For YEOC students, this is Saturday morning.

It’s the first official YEOC session of the year and things are in full swing. With “team building and networking” as the theme, students are introduced to the year’s first team activity: the Building Bridges Challenge. For this challenge, students are tasked with building a model bridge that stretches from Seattle to Mercer Island. However, there’s a catch—students can only use items found in their mystery bags. With a round of voting led by YEOC mentors Kainen Bell and Diana Lopez, the winners receive VIP Lunch access (first dibs in the lunch-line and a sit-down with keynote speakers), cupcakes courtesy of Trophy cupcakes, and bragging rights.

See a few pictures from the October session below.

YEOC pep rallyYEOC students

 

 

 

 

YEOC students

 

 

 

YEOC students

 

 

 

 

YEOCgroup2

 

 

 

 

 

 

 

 

 

 

 

 

 

This blog post is a part of a series focusing on monthly YEOC student activities. Visit the YEOC page to learn more about the program.

Is an MBA worth it?

When Dan Poston, Assistant Dean of Masters Program, recently addressed a group of prospective students interested in pursuing an MBA, he argued the practicality and attractiveness of MBA degrees to employers. “When recruiters recruit for MBAs,” Poston said, “they’re looking for someone who has been trained across all the different business disciplines.” Poston also discussed the Foster School’s full-time and part-time options, the enviable job-placement skills of MBA Career Management, and the high caliber students who enter the programs. Likening the process of selecting an MBA program to choosing a cruise, Poston believes that a positive MBA experience relies largely on the people you (the student) share it with. “You learn just as much from the people who are in the program with you,” he said. Watch selected clips from his talk below.

Do you know anyone who may be interested in earning an MBA while they work? Send them an invite to the next Work + MBA open house. See the event page here.

Whistle while you work

Business Leadership Celebration honors remarkable alumni, sings a Disney tune

The University of Washington Foster School of Business welcomed the CEO of Disney and honored three remarkable leaders—a healthcare entrepreneur, a pioneering academic and a city-defining developer—at its 23rd annual Business Leadership Celebration at Bellevue’s Meydenbauer Center last night.

Business Leadership Celebration 2014
Dan Baty, Dean Jim Jiambalvo, Nancy Jacob, and Kemper Freeman at the 2014 UW Foster School Business Leadership Celebration.

The evening’s hosts were UW Regents Marnie Brown (BA 2014), a student in the Foster School’s Master of Professional Accounting Program, and Orin Smith (BA 1965), retired president and CEO of Starbucks.

In his keynote conversation, Robert A. Iger, chairman and CEO of the Walt Disney Company, shared his essential traits of a great leader: curious, optimistic, focused, fair, thoughtful, decisive, risk-taking, courageous, innovative, and a perfectionist to boot.

In Q&A with ABC News correspondent Cecilia Vega, Iger embarked on an entertaining meander of topics, ranging from his humble start at ABC four decades ago (when his myopic first boss declared him “not promotable”) to the great leaders who influenced him (including Roone Arledge, Tom Murphy, Michael Eisner and Steve Jobs). He recalled the risk he took to bring “Twin Peaks” to the small screen and the even larger risk that Walt Disney took to bring “Snow White” to the big screen. He noted successful Disney acquisitions of Pixar, Marvel and Lucasfilm (for a total price tag of more than $15 billion), and shared a laugh at his folly in greenlighting “Cop Rock,” a short-lived TV police musical in the early ’90s. And he celebrated the Disney’s historically successful first animated feature directed by a woman—Jennifer Lee’s “Frozen”—and historic construction of the company’s largest castle ever for Disneyland Shanghai.

“I’m often asked what I think Walt Disney would think of the company today,” Iger said. “I think he’d be unbelievably proud. We’ve managed, after 91 years, to continue to be relevant to a world that doesn’t look anything like the world that existed either when Walt founded the company in 1923 or when he died in 1966. And we’ve done so without compromising the values that Walt put into everything that was Disney: notions of optimism and inclusiveness, universally appealing stories that touch people’s hearts.”

Distinguished Leaders
Walt Disney famously said that “if you can dream it, you can do it.” No one embodies this notion better than the three recipients of the Foster School’s 2014 Distinguished Leadership Awards.

Dan Baty (BA 1965) is a life-long entrepreneur who has catalyzed successful ventures in international healthcare, wine and wealth management. After growing a small chain of nursing homes in his early career, Baty co-founded Emeritus Senior Living, a network of assisted living and retirement communities in 45 states. Today he’s principal of Columbia Pacific Group, a private equity and wealth management company he founded more than 30 years ago.

“Suggested speaking topics tonight were impact of the business school, and lessons learned in 43 years of business.” Baty said. “My immediate response to both of these was: relationships. And many started as an undergrad at the University of Washington.”

Nancy Jacob (BA 1967) became the first female dean of a major American business school when she was appointed to lead the Foster School in 1981. The school’s Executive MBA Program launched during her tenure. After retirement from the UW—where she was the first female full professor of finance—Jacob founded NLJ Advisors and Windermere Investment Associates and established a successful second career in the financial services industry.

Jacob remarked on the dearth of women in finance at the beginning of her pioneering career and the ongoing challenges for women in traditionally male fields. “We make a big deal of the glass ceiling for women executives in their careers,” she said. “But that’s misleading because life is not a vertical climb. It’s a multidimensional trip. It doesn’t come with an easy button or a fair button. It is what it is. But when one door closes, another opens. You have to be flexible and you have to be willing to deal with adversity.”

Kemper Freeman, Jr., (UW 1963) is the chairman and CEO of Kemper Development Company, the driving force behind Bellevue Square, Bellevue Place and Lincoln Square—four million square feet of award-winning mixed-use real estate. Freeman studied economics and political science at the UW and pursued careers in farming, radio, banking, real estate, and even a stint in the state legislature before joining the family business that has reshaped the city of Bellevue.

Freeman shared his family’s philosophy of devoting 30 percent of waking hours to the community, saying that the “absence or presence of private-sector leadership within a community makes or breaks that community.”

He also credited the amazing diversity of successful local companies—Boeing, Microsoft, Costco, Amazon, Nordstrom, PACCAR, to name a few—as well as the Foster School with making this a golden age for the region’s economy. “There’s so much bad news going around,” Freeman said. “But if this isn’t Seattle and Bellevue and the Northwest’s best time of all, I don’t know what it is.”

More than $100,000 in net proceeds from the UW Foster School Business Leadership Celebration will support scholarships and help create futures at the University of Washington.

Meet the 2014-2015 YEOC Mentors

This year’s crop of YEOC mentors and mentors-in-training share their majors, heritage, and more.

mcconnell-danielle Danielle McConnell, Junior
Major: Information Systems & Marketing
High School: Kentwood
Heritage: African American & Japanese
Activities: VP Of Information Systems for Association of Black Business Students (ABBS)
lopez-diana Diana Lopez, Junior
Major: Communications
High School: Wapato
Heritage: Hispanic
Activities: Boeing Internship and traveled to Ecuador last summer
Emmeline Vu Emmeline Vu, Junior
Major: Information Systems and Marketing
High School: Inglemoor
Heritage: Vietnamese
Activities: ASUW Board of Directors, TedxUofW, Delta Sigma Pi Business Fraternity, Campus Tour Guide, Concur Technologies Intern)
Irah Dizon Irah Dizon, Junior
Major: Human Resources & Operation & Supply Chain Management
High School: Mount Tahoma
Heritage: Filipino
Activities: Intern at Seattle City Light, Former Resident Advisor, Former Dream Project High School Lead
jeremy santos Jeremy Santos, Senior
Major: Finance
High School: Kentridge
Heritage: Filipino
Activities: Montlake Consulting Group, Foster Student Ambassador, Peer Coach
Jordan Faralan Jordan Faralan, Senior
Major: Marketing & Entrepreneurship with a Diversity Minor
High School: Oak Harbor
Heritage: Filipino
Activities: President of UW Hip Hop Student Association, Program Manager for ASUW Arts, Foster Student Ambassador
Joshua Banks Joshua Banks, Junior
Major: Finance and Accounting
High School: Washougal
Heritage: African American & Korean
Activities: Sigma Phi Epsilon Fraternity
Kainen Bell Kainen Bell, Senior
Major: Information Systems, Social Welfare
High School: Stadium
Heritage: African American
Activities: Director of
Service & Partnerships for
ASUW, UW Salsa Club,OMAD Ambassador, Intern at KPMG, Interned in Brazil
Karla Belmonte Karla Belmonte, Senior
Major: Accounting
High School: Highline
Heritage: Mexican
Activities: Association of Latino Professionals in Finance & Accounting (ALPFA), intern at INROADS
garcia-maria Maria Garcia, Junior
Major: Finance & International Business with a Spanish minor
High School: Royal
Heritage: Hispanic
Activities: Association of Latino Professionals in Finance & Accounting (ALPFA), intramural softball and soccer
Midori Ng Midori Ng, Junior
Major: Information Systems & Marketing with a Diversity minor
High School: Eastlake
Heritage: Chinese & Japanese
Activities: UW Relay for Life, Campus Tour Guide, Foster School Ambassador, Peer Coach, Intramural Volleyball, Case competitions
Nura Marouf Nura Marouf, Senior
Major: Supply Chain & Operation Management
High School: Shorewood
Heritage: Middle Eastern
Activities: Foster Ambassador, Fashion intern at Jahleh, National Association of Black Accountants (NABA), Case competitions
rodriguez-skyler Skyler Rodriguez, Senior
Major: Interaction Design IxD
High School: Inglemoor
Heritage: Filipino
Activities: IxDA spreading awareness of the importance of design and uncovering the importance of a collaborative learning environment
atafua-taupule Taupule Atafua, Senior
Major: Human Resource Management with a Diversity minor
High School: Auburn Riverside
Heritage: Pacific Islander
Activities: VP of UW Polynesian Student Alliance Organization, Student Resource Coordinator Lead at ECC, OMAD Ambassador, Phi Sigma Pi Honors Fraternity
tina moore Tina Moore, Senior
Major: Accounting & Information Systems with a Diversity minor
High School: Henry Foss
Heritage: African American & Korean
Activities: Association of Black Business Students (ABBS) President, Foster Student Ambassador

2014-2015 Mentors-in-Training

Dre Fariñas Dre Fariñas , Senior
Major: Accounting & Information Systems
High School: Kentridge
Heritage: Asian American & Haida American Indian
Activities: Association of Latino Professionals in Finance & Accounting (ALPFA), OMAD Mentor, Intramural Football & basketball
Fabio Pena Fabio Pena, Junior
Major: Finance
High School: East Valley
Heritage: Hispanic/Mexican
Activities: Association of Latino Professionals in Finance & Accounting (ALPFA), Sigma Lambda Beta International Fraternity, Husky Leadership Initiative
Jo Yee Yap Jo Yee Yap, Sophomore
Major: Business Administration
High School: Interlake
Heritage: Chinese Malaysian
Activities: Dream Project, Resident Advisor, Ascend
lee-lander Lander Lee, Sophomore
Major: Accounting
High School: Inglemoor
Heritage: Chinese & Filipino
Activities: Sigma Nu Fraternity, Delta Sigma Pi Business Fraternity, Foster School of Business Ambassador
Vipo Bun Vipo Bun, Sophomore
Major: Accounting
High School: Renton
Heritage: Cambodian
Activities: National Association of Black Accountants (NABA), Association of Black Business Students (ABBS)

Learn more about the YEOC program here.

True North

Keeping the customer as its lodestar, Alaska Air Group navigated a turbulent decade to emerge as one of the marquee companies in the Pacific Northwest

Alaska Airlines plane in the skyAlaska Air Group recently moved into to the Fortune 500, that ultimate collection of the nation’s elite businesses, that manifest marker of size and success.

It was no small feat for a comparatively small, independent carrier to join the big boys in an industry marked by brutal competition, rampant consolidation, and chronic crisis. And it was even more remarkable that Alaska sustained its growth through a decade of Herculean trials.

So you might expect this momentous milestone would call for some serious celebration at the company’s south Seattle headquarters. Some bottles of champagne, perhaps. A press release, at least. Did they even pause to savor the achievement?

“We celebrate a lot of things,” says Brad Tilden (EMBA 1997), the chairman and CEO of Alaska Air Group. “But we didn’t really celebrate joining the Fortune 500.”

The understatement adds up when you consider it comes from a man possessed of a pilot’s cool and an accountant’s good sense leading a company with roots in the Last Frontier.

“It’s like compound interest,” Tilden adds. “Somebody had a really good idea 82 years ago, and we’ve been working at it year after year.”

 

Alaskan roots, American dream

Linious McGee's three-seat Stinson
The roots of Alaska Air Group: Linious McGee’s three-seat Stinson.

That somebody was Linious McGee, who began flying passengers and cargo in his three-seat Stinson between Anchorage and Bristol Bay back in 1932. A merger, two years later, with Star Air Service created Alaska’s largest airline, eventually renamed after the state.

At the industry’s deregulation in 1978, Alaska was the 24th largest airline in the US. And it was just beginning expansion into the Lower 48. By the end of the 1980s, Alaska Air Group had added regional carriers Horizon Air and Jet America. It had enjoyed nearly two decades of profitability and sustained growth. And it had earned a reputation for superior customer service.

Economic prosperity and low fuel costs kept Alaska growing through the 1990s.

But Tilden, who joined the company from Price Waterhouse in 1991, says that Alaska Airlines was growing almost despite itself. Friendly service masked a declining efficiency of operations. Complacency had crept in, a culture of good enough, not great.

As the century turned, Alaska’s internal vulnerabilities were about to be mortally tested.

 

Turbulence

The century’s first decade began in tragedy. The January 2000 crash of Alaska Airlines flight 261—half of its 88 victims being employees, family members or friends—sent the tight-knit company into mourning.

It was only the first of a litany of trials to challenge both airline and industry. Shortly after the dot-com bubble burst in 2001, the attacks of 9/11 altered air travel forever. The SARS scare of 2003 followed. Then oil prices spiked just as the financial crisis shook the foundations of the global economy.

Amid the external pressures, Alaska Airlines faced a litany of contentious labor contract negotiations beginning in 2003. Strained morale brought a dip in performance. There were simply too many late flights and mishandled bags.

“Alaska was burning through the goodwill it had earned over many decades,” says Bruce Avolio, director of the Center for Leadership and Strategic Thinking at the University of Washington Foster School of Business.

A new case study by Avolio, Chelley Paterson and Bradford Baker chronicles Alaska’s decade of dilemma. Survival would require absolute transformation—modernizing operations and slashing costs—without sacrificing the legendary customer service experience that had made Alaska Alaska.

“There was an increasing recognition among the leadership,” says Avolio, “that the course they were on could not continue.”

 

Crossing the Rubicon

The situation demanded decisive action. And fortunately, Bill Ayer (MBA 1978) had risen up the ranks to become CEO in 2002.

“At a time when this business required a person of tremendous courage,” says Tilden, “Bill was the perfect leader.”

Ayer never wavered from hard—and sometimes heartbreaking—decisions. The first set the tone for the company’s transformation. Amid an epidemic of default that swept the major carriers, Ayer declared that Alaska would not seek bankruptcy protection.

“We figured out what our costs needed to be for us to be viable and said to ourselves that we simply have to get there,” recalls Tilden, then CFO.

Among the difficult moves to ensure the company’s survival were a painful round of layoffs, the outsourcing of some ground operations, and some pragmatic dealing for concessions from the unions.

“The choice to stay out of bankruptcy helped the company downstream,” Avolio says. “By not destroying people’s pensions and protecting this covenant with their employees, Alaska’s management salvaged a degree of trust.”

That trust would prove vital.

 

Fix Seattle, then the company

Alaska Airlines plane flying over SeattleIf cost cutting took toughness, improving performance took smarts. There was a lot to fix, but Ayer and Tilden chose, wisely, to first fix Seattle, Alaska’s largest hub.

“We identified the basic things we needed to improve upon to be successful—safe operations, on-time performance, low fares and great customer service,” says Tilden. “And we focused relentlessly on them.”

Applying lean methodology and measuring every task, performance began improving immediately, first in Seattle and then throughout the network.

“Once they fixed Seattle, Alaska demonstrated what can be accomplished in its other cities,” says Avolio.

The dramatic transformation has been widely confirmed. Alaska has been rated highest in customer satisfaction (among traditional network carriers) by J.D. Power seven years in a row. It’s been number one in on-time performance four years running according to FlightStats.com. Outside dubbed Alaska its “Best Airline” in 2014.

Alaska has earned highest marks in just about every category awarded: air cargo handling, delivery and logistics, technology, maintenance, sustainability, philanthropy, loyalty program, employee satisfaction—even friendliness to pets.

And aggressive expansion to the East Coast, Midwest and Hawaii when others retreated has made Alaska one of the fastest growing companies in the industry.

 

The importance of being Alaska

That growth has lifted Alaska into the Fortune 500. The company may barely have noted the milestone. But Seattle should.

Alaska’s ascendancy adds another industry leader to the region’s increasingly diversified economy, according to Suresh Kotha, the Olesen/Battelle Excellence Chair in Entrepreneurship at the Foster School.

“Having another service-based company like Alaska become a dominant player in its industry creates jobs, broadens our economy and buffers us against the kind of cyclical downturns we used to face.”

He’s referring to the not-so-distant past when a slowdown at Boeing threatened to shut down the city. But today Seattle enjoys a far healthier balance of manufacturing, service and retail. The region is home to nine of the Fortune 500 plus other powers in a wide array of industries including aerospace (Boeing’s continued strong presence, plus a galaxy of suppliers), software (Microsoft, RealNetworks), retail (Amazon, Starbucks, Costco, Nordstrom, REI, Eddie Bauer), truck manufacturing (PACCAR), trade (Expeditors International), forestry products (Weyerhaeuser), and clusters in telecommunications, biosciences and gaming.

A successful airline adds to the economic diversity. “It’s making Seattle one of the nation’s best places to do business,” Kotha says.

Avolio adds that other companies could learn a great deal from Alaska’s customer focus and level-headed navigation of crisis “with discipline and focus.”

The other lesson of Alaska, he says, “is that the essence of great leadership is building a sense of ownership in employees and customers.”

 

People power

Ayer asked a lot of Alaska Air Group’s employees to save the company in its darkest hour. And those employees stepped up.

“We are the only legacy airline not to have filed for bankruptcy, thanks to the determination of our people,” he says. “What we learned by doing the hard work ourselves bodes well for our future.”

In 2012 Ayer passed the controls to Tilden, a new kind of leader for a new chapter in Alaska’s story. His focus today is on fine tuning the customer experience.

Tilden is continuing to foster Alaska’s celebrated culture of innovation that delivered the industry’s first online ticket sales and check-in kiosks, and is now developing apps to remove the anxiety from travel. “The goal today is to be the easiest airline in the world to fly by 2017,” he says.

Of course, technology can only do so much. People make the difference. While continuing to cultivate top management prospects in the Foster Executive MBA Program (see sidebar), he’s really trying to push the airline’s leadership to the front lines.

“The big opportunities going forward will come from consistent execution and delivery of service across every airport and every employee,” says Tilden.

To that end, he has initiated two company-wide programs to engage every employee and empower them to lead. It helps that they have a vested interest. As the profit-sharing program that Ayer and Tilden started during the lean days of the mid-2000s begins to pay handsomely, the link between airline performance and personal prosperity is easy to follow. That’s good for everyone’s bottom line.

“If the employees want us to be a great airline, we’ll be a great airline,” Tilden says.

 

Further frontiers

Alaska Airlines plane flies over a mountainThe airline industry seems to have stabilized, and Alaska is all systems go, elevating both its standards and goals. An exemplar of corporate responsibility, it’s also a pillar of philanthropy in the larger community—and especially at the University of Washington.

“There is a really special culture at Alaska,” Tilden says. “A real sense of mission, that what we do for the communities we serve—the infrastructure we provide businesses, the connections we provide families—is important.”

“What makes me proudest is the company’s outstanding performance since I retired,” says Ayer. “The team is executing better than ever and, as always, there’s no shortage of challenges. The reality is that there are a lot of factors that are not controllable, so those that are must be very well managed.”

Tilden is ever vigilant. Or, as they like to say in Alaska’s HQ, “Brad’s never happy.”

He’s seen the perils of complacency, especially when most of the challenges ahead are yet unseen.

“In some ways, the challenge was simpler ten years ago,” notes Avolio. “You knew all of the things that were broken; you just had to fix them. Today, you don’t know where the market is going. There are a lot of question marks.”

One certainty is that fierce competition will come from smaller airlines and the big ones (which keep getting bigger through consolidation). Most immediately, Delta is making a significant incursion on Alaska’s prime West Coast territory.

But Tilden believes that Alaska Air Group has found the secret. And it’s not at all sexy. “What’s going to help us succeed over the long run is continuing to do the basics well,” he says. “We need to be safe. We need to be on-time. We need to offer low fares. We need to provide great service. Those things are 100 percent in our control. And I think if we get them right, we’re going to win.”

 

Additional reading:

Alaska Air Group has long leveraged the Foster Executive MBA Program as a de facto training academy for future leaders, beginning with current CEO Brad Tilden (EMBA 1997). Learn more about the special relationship between Foster’s EMBA program and the Alaska Air group.

- Faculty perspectives, alumni happenings, student experiences, Seattle and Pacific Northwest community connections, and a taste of life around the Foster School.