Structural or Cyclical? Or does it even matter? (#2)

By: Randy Ataide

A recent post provided some initial thoughts upon our return from the National Association for Business Economics annual policy conference in Washington D.C. I have enjoyed my times at these conferences the past few years, but am enjoying it much more since we have been joined with energetic, fun and very intelligent PLNU MBA’s. There is something about young professionals and executives walking into a business or economic seminar or event that electrifies a room.

I wrote of my great fear of long term unemployment and the toll it is taking on our nation. Listening to Fed Chairman Ben Bernanke, I firmly agree that in moving forward towards prosperity, the economy must grow more rather than only focusing upon cutting and trimming. If not, we risk the vicious convulsions racking much of Europe these days. And I think this is true not only of nations but of many other organizations, for profit and nonprofit alike, small, medium or large in size.

In any organizational context, it is important to realize the difference between prudent stewardship and resource accountability and leadership vision, strategy and action. While these practices are related, too often the former dictates the latter. It is analogous to allowing a Human Resources Department to have disproportionate power in a company. While the standardization of practices, policies and procedures is a worthy goal for a company, HR must be there to support the organization rather than drive the organization. Too often, constraints placed by bureaucrats stifle and choke off innovation, entrepreneurship, creativity and in the final analysis, company growth. When stifling agents and activities choke these critical activities off in companies, we find that it matters little if a downturn like we are currently experiencing is structural or cyclical. It matters little if it is a large nation, public corporation a university or a micro-enterprise—the diversion of personal and organizational energy into such activities leads to low growth.

Last Wednesday night, I had the pleasure of hosting the 2011-12 PLNU Entrepreneur Enrichment Program, and listening to 12 young entrepreneurs and their mentors and advisors speak of the transformative process of taking an idea through the project and planning stage.  (For more details see). Entrepreneurs care less about cyclical or structural patterns and cycles, for they seek to create their own opportunity, win or lose. Entrepreneurs such as Arthur Cachero, Jamie-Lee Kwai, Ryan Baer, Ashton Runyon and all of the others who completed the EEP are inspirations to us all. All of us, including Mr. Bernanke and the rest of our political, business and economic leaders, should take a cue from these aspiring change agents, for they seek to create their own opportunities, rather than to ponder the questions of cycles or structures, or make time for the bureaucrats and technocrats. I say to each of them, forge ahead into the positive and prosperous future you seek.

Why I Teach?…Professor Randy Ataide unpacks his journey and shares his joys of teaching

In late 2004, Dr. Bruce Schooling, then Dean of the Fermanian School of Business, asked me if I would consider teaching the second half of a management course for MBA’s. At the time, I was the CEO of my own agricultural company near Fresno and while the thought of teaching was appealing, I had serious questions regarding my capacity to be able to succeed at teaching, let alone the 640 mile weekly round trip from my home. Preparing a syllabus and laying the theoretical foundation for a class was completely new to me, as were all of the many other things needed to teach. At a deeper level, I wondered if I could translate my own experiences in business and entrepreneurship to the classroom level.

The course turned out to be exhilarating (at least for me!), and even the long solo drive provided a respite from the burdens of the company and its many functions, initiatives, and burdens. At the completion of the course, I had built some excellent relationships with students which inspired me to seriously consider the possibility of joining PLNU full time, leading to a decision within the next year to move to San Diego. Since then, I have been busy with many tasks and responsibilities, but I have also taught a significant number of courses at both the MBA and undergraduate level.

This past Wednesday, I arrived at my office at PLNU and the flashing red light of my office telephone was informing me of a voicemail. Entering my code, the steely mechanical tone of the automated system was replaced by an exuberant voice of an MBA that I quickly recognized. She proceeded to report in enthusiastic terms how she had taken the principles learned from our Negotiation Strategy and Value Creation MBA course, and applied them into an employment setting. She explained that these skills had enabled her to successfully negotiate a new position that met or exceeded her personal and professional goals and expectations. In a most gracious and affirming way, she thanked me for the knowledge learned.

I recall coaching Little League many years ago when our son was young, and my initial year our team, despite our best efforts, went 0 and 16. Every time we were near a win, the opposing team, not wanting to be the first to lose to us, would quickly shuffle their lineup late in the game and bring in their ‘Ace’ to overpower our young hitters. With two close friends as fellow coaches, we worked hard to keep our boys encouraged and build skills throughout that long season. Morale remained high and the following season we won many games and finished second overall in the league tournament. The memories of those boys and coaches and the mutual encouragement we provided each other stay with me to this day.

There are days when I wonder why I teach, for I may be very busy or tired or stressed out (or some combination of all of these.) I question my effectiveness and after the class is completed I have doubts if I have been able to provide to the students information, knowledge, and skills that are of use to them, both now and in the future. Like my Little League team, I know that we often do not see an instant uptake, but with time the opportunity for a positive result increases. The unexpected phone message this week, just like the regular cups of coffee and conversations I have with a number of alums, or the visit I had last week in L.A. with a couple of young entrepreneurs from my class in 2006, are all examples of what provide me the continued energy to stay in the classroom. At the end of the day, they are all reminders to me of why I teach.

The Secret to Success: Silencing the Snooze

By Randy Ataide

Often when I travel, I find myself in an airport bookstore wandering the aisles. While I am an avid user of eBooks and other technological innovations, I do enjoy seeing what is currently being published and pushed to the mass markets. The blaring headline of “Ten Quick Steps to Success” or “Become a Real Estate Millionaire with Nothing Down!” usually upset my stomach, as little more than thinly veiled scams. Ugghhh!

Students, alumni and others in business frequently ask me about personal and professional success, and while this is not a topic that I have done any amount of research on, I do believe that there are certain things that any person can do which usually has very positive results. In fact, I can say that among most successful people I know, they often share one thing in common more than anything else. It is not the status of your university, a  specific field of study, grade point average, gender, socio-economic background, geographical location, career path or any of the “usual suspects.” It is something much simpler and much more accessible and attainable by anyone.

We have all heard the famous quotation of Benjamin Franklin “Early to bed, early to rise, makes a man healthy, wealthy and wise.” Perhaps our parents or grandparents recited this short proverb to us, and anyone who was raised in a farm community knows that this is near gospel to those populations. But the philosophical foundations of this traditional wisdom run much deeper, for Aristotle wrote “It is well to be up before daybreak, for such habits contribute to health, wealth, and wisdom.” In many religions the spiritual value of the early morning is at least one area in which we find much agreement. This time has been called “the heroic minute” and it is likely that Jesus often went early to find solitude to pray, think and meditate.

My students and peers at least appear to be surprised when I tell them I was a slothful and unmotivated youth, a poor student and with little life direction. At the age of seventeen, my own body clock altered, and four years in the military only reinforced this discipline. For nearly forty years, I have been a notorious early riser (you should read some of the comments I receive from people who notice the time stamps of some of my early morning emails!) I find this to be a superb time of reading, writing, thinking, praying and looking ahead to my day. The great value in having several hours of absolutely uninterrupted time cannot be overstated. Ben Franklin offered another bit of wisdom of well: “The early morning has gold in its mouth.” My own experience is that while this may not be literally true, the early morning does give one a great competitive advantage, a head start to the day in productivity which most others cannot catch up to through the rest of the day.

Recently, I have met with several young professionals, each in very different fields and all in the mid to later twenties. Without any prompting, all told me that they are rising earlier and found much of what I wrote above to be true. I have great confidence in each of them achieving their own level of success. My advice to you? Save your money on the slick airport books, lectures or other systems of success. Simply set the alarm clock, brew some coffee, and start your day!

The Other Gold Rush

By: Randy M. Ataide

Much has been made of the huge rise in commodity prices in the past few years, with prices of gold, silver and other precious metals dominating the business headlines, and many people cashing in through the proliferation of “We Buy Gold!” shops seemingly sprouting overnight throughout the country. But there has been another “gold rush” occurring in our midst, one that is just starting to get the attention of people outside of the industry.

According to a recent report by the Federal Reserve Bank of Kansas City, U.S. Midwest farmland rose over 25% in value, and some states exceeded single year price increases of 40%. This was the highest price rise in farmland in the U.S. in the survey history, and some reports pegged individual sales of Midwest farms at $20,000 per acre. For California’s own massive farm region of the San Joaquin Valley, booming exports of almonds, walnuts and other commodities has driven this land significantly higher as well, while at the same time, regulatory and water limitations have only served to make existing land and farms even more valuable. In the past ten years, California coastal lands in Santa Barbara, Santa Maria, Paso Robles and other areas have seen explosive price growth as a major wine industry has emerged, turning former idyllic ranch and grazing lands long overlooked by most into the “new Napa.” (There are now well over 200 operating wineries in the Paso Robles/Templeton/San Luis Obispo region.)

For those of us in the coastal regions, such prices would hardly catch our eye, and seem like a bargain. Imagine your own twenty acre spread in San Diego for a mere $200,000? (Can anyone say ‘Green Acres?) But for those in agricultural production (farmers), lending (bankers), services and supplies (tractor and track sales), etc., this is an alarming state of events. In any region, the escalation of farmland prices is always a very mixed blessing for the local farmer, for while it does indeed give them a bump in their “paper wealth” it typically makes it more difficult to obtain financing and operating loans and can distort the long term view of farming through enhanced competition from speculators and outside investors. How does an agricultural banker provide long term stable funding to farmers when speculators push the price upwards for the underlying asset being collateralized?

Over the past month or so, I have seen several investor newsletters that counsel their clients to consider purchasing farmland as an alternative investment, providing a tangible asset for the savvy investor in turbulent times in the global markets. As an opposing view, I would counsel caution for such investments. There are so many variables in the proper valuation of farmland, with the essential need for local knowledge often missing as to a particular parcel’s actual viability and suitability for production in these investor solicitations. In any particular area, even adjoining parcels can have very different values for reasons only accessible to a careful and experienced eye.

In my own business and investment experience, I think that farming is best left to farmers. If the bug hits you in 2012 to acquire some real estate, I would look first to opportunities closer to home, perhaps an undervalued and distressed residential or commercial property where information, knowledge and variables are better understood.

Q&A with Dr. Lynn Reaser

Q: Do you support Gov. Brown’s proposal to ask the voters to approve a five-year extension of tax increases as an alternative to cutting $12 billion top of the roughly $12 billion he already has proposed to cut? Would you vote for the measure?

No.  California’s legislature and governor need to implement fundamental reforms involving education, health care, welfare, and pensions.  Frightening voters with draconian service cuts if they fail to approve a tax increase resembles extortion.

The Small Business and Entrepreneurship Council has just ranked California as the fourth worst state for small business in part because of its taxes.  While the voice of Californians should certainly be heard, the proposed ballot timing is also terrible.  A June vote rejecting higher taxes would leave the state entering fiscal 2012 on July 1 with a deficit overhang of $12 billion. This could well cause the borrowing from different funds and other financial shenanigans frequently seen in Sacramento.

California’s budget challenge should not be presented as a stark choice between tax increases and service cuts.  Rather the focus should be on how to more productively accomplish our education, health, and other goals through working with the unions, outsourcing “non-core” public services, and “thinking outside the box.”

Radical Biblical Economics at PLNU?

By Randy M. Ataide, JD 

All of us have seen the humorous commercials for a major credit card company with the burly Vikings placed in various situations but always closing with the catchy question/slogan “What’s in Your Wallet?” In the next few months, the PLNU community will have multiple opportunities to enter into not only the “what” of your wallet, but also the why, how, where and when of our wallets as well.  

In April, PLNU’s Center for Justice and Reconciliation will be hosting Ched Meyers, a biblical scholar and popular educator. Meyers is a noted author, organizer and advocate who has for 30 years been challenging and supporting Christians to engage in peace and justice work and radical discipleship. At chapel and at Brewed Awakening, Ched will interact with the PLNU community about his vision of compassion, equity and justice, utilizing the gospel of Mark and his own experience in the founding of Bartimaeus Cooperative Ministries committed to mutual aid and discipleship. His writings and language are freely sprinkled with terms such as radical economics, ecojustice, jubilee and other phrases all of which are concepts and recommendations that are uncommon to most conversations on economics.  Undoubtedly, PLNU’s time with Meyers promises to be provocative, insightful and challenging. (For more information on the Brewed Awakening events see http://www.pointloma.edu/experience/academics/centers-institutes/center-justice-reconciliation/brewed-awakening/spring-2011-schedule)

But how should Christian businesspersons and economists respond to Meyers? While at the present time I am drawing no personal conclusions as to his views, as a member of the School of Business faculty at PLNU and an entrepreneur and businessperson, I must admit that I often wince when I hear church leaders, pastors and theologians speak on business and economic issues. While they may properly identify an unjust situation and experience, frequently I think that they show little understanding of practical economic realities, especially when it comes to the operations of businesses and the decision-making processes that we use. All too often, sharp lines are drawn as if Christians engaged in business are not “fully” Christians, and that such efforts and endeavours are far apart from “God’s work.” This concern led me to present a paper titled A Transformational Undertaking: Entrepreneurship and Economic Freedom that challenged some fundamental notions and understandings of radical and jubilee economics at the Prophetic Imagination Conference held at PLNU in 2010. (A version of this paper appeared in the Fall 2010 PLNU Viewpoint.)

In the book, Church on Sunday, Work on Monday, Dr. Laura Nash of Harvard Business School and Scotty McLennan, dean of religious life at Stanford University, suggest that business and economics is not as simple as religious leaders tend to think it is. Capitalism is frequently reduced to a monolithic concept labeled as “The Market,” that inevitably exploits all participants except the most powerful. In my own experience, misconceptions about the marketplace create hurtful and inaccurate stereotypes that portray even Christian businesspeople as uncaring, unthinking, exploitative, and unengaged. Events of the past few years that led to a global economic crisis certainly do need examination and critique, but we should work towards a richer and more accurate view of business and economics than is often portrayed – one comprising numerous relationships and actions, full of nuances and complexities.

Spurred on by this opportunity for the PLNU community to engage with Meyers, and with a desire to have a deeper dialogue on the important issues of personal and communal economic decisions and the results and effects of these decisions, not only will we have Meyers appear in several venues, other PLNU voices will attempt to expand upon Meyer’s message. Dr. Jamie Gates and I will appear in a follow-up chapel to discuss radical and jubilee economics, but more importantly faculty members of the Department of Sociology and the Fermanian School of Business will engage in a series of articles to appear preceding Meyers’ time at PLNU in April. Short opinion pieces will be written on a variety of economic issues including debt, vocation, justice and personal economic decisions which should provide many members of the PLNU community the opportunity to enter into this important dialogue. These articles should be appearing not only in The Point Weekly but in social media sites to make them widely available. There will likely be diverse opinions expressed on these issues providing for interesting reading but more importantly to provide time for personal and communal time of study, reflection, prayer and action.

Therefore, many of us are looking forward to participating in a vigorous yet temperate and gracious dialogue with Meyers and others and sincerely believe that this is an important topic for all of us at PLNU. I am grateful to Dr. Jamie Gates and PLNU for their leadership in bringing Meyers to PLNU and also for Dr. Mary Paul and Mark Carter for seeking to broaden the economic conversation, creating a great opportunity for students, colleagues and friends to share in this very important issue that affects all of us.

Walking on Water Fundraiser Banquet!

Former professional surfer Bryan Jennings graduated from PLNU in 1998 and has since founded and become the executive director of Walking on Water Ministry (W.O.W.).  Bryan was also one of the 2010 Alumnus of PLNU Award recipients highlighted in the most recent issue of the Viewpoint!

Now  Bryan wants to extend an invitation to the PLNU community for an upcoming fundraiser dinner on Friday, November 12 at 6:30 pm. This fundraiser is complimentary and there is no obligation whatsoever to give financially. Bryan mainly just wants to raise awareness of his ministry and increase prayer support.

This is a great opportunity to go out and support PLNU alumni out in the community so be sure not to miss this event!!

Legacy Creation or Dumb Luck?

By Randy Ataide

The other night I had the opportunity to speak at University of San Diego at the Wealth and Legacy Seminar Series, and tackled the topic of how business leaders can build and maintain a legacy. This is a tricky question, not the least of which is that one’s legacy is inherently subjective. One person may hold that passing a successful business to an heir is a legacy while another may believe that developing a capacity for charity and philanthropy is theirs.  Provided that these choices are not based upon exploitation and destruction, It is difficult for me or anyone else to criticize such a personal decision.  I preceded the venerable Ken Blanchard, perhaps the leading leadership and legacy author of the past twenty years, and fortunately for me he much to agree with. (Did you know Ken was awarded by Amazon for being one of their 25 bestselling authors of all time? Wow!)

But before one can worry too much about what a specific legacy is or should be, one must first consider how to build a career or company that has the capacity to develop a legacy. One of the most surprising things I discover about speaking to groups of businesspeople in a wide variety of settings and sectors is that most really have not thought much about what business they are really in, as it is easy to confuse one’s products and services with the “real business.” What do I mean? Consider that if your particular business is financial products including life insurance, it is very easy in the midst of the work it takes to develop and understand the products, obtain the professional certification to sell the products, locate a potential client, make a proposal and close a sale, to actually overlook what is really occurring. At first glance it would seem that the real business is relationship building, but this is not the full answer. What is really occurring in such a circumstance is much more complex including key elements of trust and assurance, but also a unique set of feelings, emotions and sensory experiences about the transaction itself. Were details paid attention to? Appointments kept? Proposals clear and accurate? Ease of payment? All of these play a part in the psyche of the customers of our business, and the better that we understand this the higher the likelihood of success in the short term and legacy in the long. It is relationship building but so much more.

How do you figure this out in your own particular context and business? It really isn’t that difficult to find the answer, and we have a nearly twenty year old Harvard Business Review article by Treacy and Wiersma to thank. They concluded that there are only three “value disciplines” (e.g. “value propositions”) available to any business: first, one could have operational excellence, or the capacity to do something better, faster and/or cheaper. Second, a company could have products leadership, which more often than not is not a monumental change from what others are offering but rather subtle yet sophisticated refinements of existing products. Last, you could have customer intimacy, meaning you have developed the capacity to know, understand and serve your customers better than the competition. Obtaining one of these means you have a viable business; two of them (in any combination) is competitive advantage; all three is sustainable competitive advantage, or the “Holy Grail” of business.

This really isn’t rocket science, but a surprisingly large number of business owners either are unaware of this simple analysis or delude themselves into thinking that they really have one or two of these disciplines when they really don’t. And financial success or business accolades can sometimes mask underlying problems in the firm. A key litmus test is if all employees in the company regardless of rank, title or seniority know what the discipline is. In other words, is your particular discipline(s) unique, flexible, understandable and transmittable? If they are not known throughout the firm you likely don’t have a value discipline but rather just dumb luck.

So before you think too deeply on your legacy, think about the task at hand: Leading or working in your companies to recognize and then align assets and efforts around maximizing the opportunity created by your particular value discipline(s). That is one of the first steps you must take on creating the capacity for a personal and professional legacy.

View the powerpoint here: http://www.scribd.com/rataide1 
Under “Building a Legacy in Business”

Entrepreneur Enrichment Program (EEP) Expo

Fermanian School of Business & Conference Center presents

Entrepreneur Enrichment Program Expo

Wednesday, October 6th, 2010

5:30 P.M. – 8:30 P.M.

Seating is limited. Please RSVP to courtneyhamad@pointloma.edu.

The Entrepreneur Enrichment Program (“EEP”) seeks to encourage, stimulate and nourish the entrepreneurial process in any full or part-time student and in all academic disciplines at PLNU by providing specific personal, business and professional counsel for student-entrepreneurs’ business plans from recognized industry leaders, entrepreneurs, and financiers.

The following are the presentations and entrepreneurial ideas presented by PLNU undergraduates and MBAS:

Project: Leed Generators

Travis Albaugh, Senior
Managerial Organizational Communications Major

Project: Gourmet Humus

Ivan Arabo, 2nd Year
Master of Business Administration

Michael Riendeau, 2nd Year
Master of Business Administration

Project: The Sports Club

Diana Calderon, Junior
International Development Students Major

Project: Bordertraffic.com

John Cosby, 2nd Year

Master of Business Administration

Project: Hayden’s Clothing

Jeff Davis, 2010 Alum
Business Administration Major

Joe Davis, Junior
Business Administration Major

Project: webdev 2.0

Carl Gardner, 2010 Alum
Business Administration

Project: eHipp

Luke Harmon, Senior
Business Administration Major

Project: Fortegigs.com

Derek Jackson, Senior
Business Administration / Music Major

Project: Out Stories Connected

Maxwell Trzcinski, Senior
Business Administration Major

Freedom from Innovation

By Breton Buckley

In response to Professor Ataide’s essay, Google’s Vision vs. Apple’s Vision?, I have been struggling with the issue of open source for the past three years, both in the embedded technology business and in how I advise students. 

From a product perspective, the criticism of the Android smart phones, based on the Android open source operating system, is that they are all the “same” phone, sharing the same platform and app store.  They are commodities, competing on price.  Meanwhile, Apple’s iPhone, a completely closed system that controls both hardware and software, innovates and differentiates. 

But Motorola is a good case study of how open source saved the cell phone division.  They were complacent after their RAZR success and found themselves losing money and market share.  I was at a Motorola event last July in San Francisco when they told a group of us that they were betting the farm on Android and would roll out a slew of Android phones.  There was no way Motorola on its own could develop anything comparable, and Microsoft’s Windows Mobile OS was lagging.  The bet paid off and the company is recovering.  Recovering, but not dominating.  Motorola, HTC and Samsung are all battling it out in the commoditized smart phone market, with Apple soaring above.

But my concern for our students is in the area of entrepreneurship and economic opportunity:

1) How can they differentiate in product offering when everyone has the same access to open source and platforms? 

2) How can startups be successful in this environment?

3) How will our students get good jobs in what appears to be a major structural shift?

Over the last 15 years the business model for thousands of startup software companies was to invest in engineering to develop intellectual property, and then license that technology to manufacturers.  That market has now virtually collapsed, in part due to the open source movement, as well as movement to Asia and hardware companies providing free software.  (Google’s open source WebM video codec will now erode licensing fees for competing codec companies in a similar way.)  The number of software startups in San Diego has drawn to a trickle, while Qualcomm has absorbed a lot of jobs and companies.  VC funding in San Diego is scarce.

On the other hand, all the cell phone innovation is coming from North America, in that the dominant operating systems are Blackberry, iPhone, Android and Microsoft Windows Mobile.  But unless you work for those companies, you don’t benefit. 

While my experience is in the embedded technology market, I totally agree that also on a broader scale it is a profound philosophical battle with regard to how products are brought to market and what we teach our students in order to compete.   I try to teach the students as much as possible regarding leveraging the Internet and e-marketing in order to have a global reach, even for a small business.  But I think what is most essential, and what seems to be an even greater challenge now than previously, is the need for real innovation, benefit and differentiation, and a business model to support it.

Open source may be free, but is it worth the cost?

Breton Buckley is Adjunct Professor of Marketing in the School of Business at PLNU.