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Bain & Company's corporate presentation on Monday September 22, 1997, will be a significant event for the University of Michigan Business School. Bain & Company is new to this year's recruiting schedule; however, the story behind this addition is more than just the story of a prestigious addition to the UMBS recruiting roster. It is the story of the triumph of a number of students, faculty, and the Office of Career Development. It is a story that provides a lot of insight into the reason UMBS is ranked #2 and moving up.
The story starts last year when the Consulting Club decided it would like to bring more top name consulting companies to campus. Consulting Club President Matthew Jauchius said he believed there was a "perceived need to add to the consulting companies coming to campus--and it was also a good time to capitalize on our rankings." Demand alone is not enough to bring top companies to campus, so the Consulting Club approached Professor Noel Tichy, who knew Tom Tierney, the Worldwide Managing Directory of Bain & Company. When Professor Tichy was approached, he was surprised that Bain & Company was not recruiting at Michigan. Because the objective was to get Bain & Company interested in UMBS graduates, Professor Tichy proposed a case format to allow the MBAs to showcase their skills.
Tierney provided the subject matter for the case: "Managing Human Resources for Competitive Advantage." Tierney wanted the UMBS MBAs to make recommendations on how Bain & Company could use its human resources to gain competitive advantage against its arch-rivals: McKinsey & Company, Boston Consulting Group, and A.T. Kearney. With that mandate, 30 first- and second-year MBAs set out to research and prepare recommendations. The process was led by Professors Tichy, Andy McGill, and Phil Mirvis.
Because Mr. Tierney already knew about the human resource practices within his industry, the team members focused their recommendations on the human resource practices of five of America's premier non-consulting companies: General Electric, Hewlett-Packard, Intel, Kraft, and Merrill Lynch. Tierney was invited to campus, where the findings and recommendations were presented to him on April 8. In addition to the recommendations, Mr. Tierney actively discussed other issues with the teams, including ideas on Bain's "Employment for Life" concept, the balance and distribution of partner power, and how to create and sustain a sense of ownership in his people. Numerous ideas were generated for Tierney, who took them back to Boston.
Professor Tichy said that Tierney was extremely impressed with the students who participated. "He was very impressed with the caliber, candor and courageousness of the Michigan MBAs." Two weeks later, Bain & Company called to say they would like to begin recruiting on campus in the fall. Jauchius and Elise Kelly, of OCD, continue to work with Bain to ensure that everything is properly arranged for its visits this fall. Jauchius is cautiously optimistic: "Bain's recruiting process is highly competitive; they only hire a few dozen consultants a year. I would encourage anyone interviewing with them to know their cases and be prepared. I am confident that we will impress them." So with the journey to attract Bain to campus finished, a new journey begins.
While the Bain & Company story is unique in some aspects, it is by no means unusual. Although the exact number of new additions to this year's recruiting roster were not available from OCD at the time of this article, Jauchius and Finance Club President Joe Juarez pointed to a number of prestigious companies that are either coming to UMBS for the first time or stepping up their recruiting efforts here. They include: Goldman Sachs, Morgan Stanley, SBC Warburg/Dillon Read, and Donaldson, Luftkin & Jenrette. For the most part, these additions are initiated by MBA students who work with alumni and OCD to make the recruiting visits happen. The payoff from this team effort won't be known until the end of the recruiting year, but there is every reason to be optimistic.
The Bain & Company Corporate Presentation will be Monday, 9/22, from 7:00 ? 9:00 p.m. at the Michigan Union. Coincidentally, the Donaldson, Luftkin & Jenrette Presentation and SBC Warburg/Dillon Read presentations will also be held on Monday 9/22. See the calendar on p. 4 for details.
A recent JD Power and Associates study showed that the supply of sport utility vehicles will finally catch up to demand over the next five years as over 20 new models will be introduced. However, the growth of this SUV market is expected to slow and become increasingly fragmented. I don't even know how many segments there are now--full size, intermediate, standard, compact, mini . . . .
In May of 1999, Ford plans to open a 50,000 square foot, interactive facility that reveals how it builds cars. The "Spirit of Ford" will be located near the Automotive Hall of Fame and the Henry Ford Museum. After benchmarking other facilities from Coca-Cola and Nike, Ford hired the designers of Sea World and Busch Gardens to make something that would give the public an exciting look into the automotive world. Ford plans to use the opening of the facility as the first in a series of events to lead up to its 100th birthday in June, 2003.
The New York Times recently reported that the company Landjet, Inc., is outfitting GMC Savana vans as fully equipped traveling offices--complete with a desk, fax, printer, copier, computer ports, TV, VCR, refrigerator, microwave, global mapping system and cell phone hookups--for executives who are giving up limousines. Landjet has sold 12 vans since November of 1996 at $80,000 each--to corporations, individuals and lawyers. For extra protection, you can even buy it with a bullet-proof option. The company claims that it offers the benefit of turning traveling days into working days and believes many executives will prefer traveling in their office-vans instead of airplanes for trips under 300 miles.
Toyota will put the "I love what you do for me" ad slogan to rest in favor of a series of new ads. The first ones will say "All you have is today. How will you make it count?" The ads will have a series of people speaking about their hopes and meaningful plans such as a woman spending more time with her children and a man vowing to not take his wife for granted. In the background as the scenes shift . . . a Toyota. Executives believe that consumers are aware of Toyota's reliability and durability and now want a fresh approach. Look for the ads soon.
In related news, Lexus (built by Toyota), plans to sell over 100,000 cars in the U.S. for the first time ever. The expected growth in cars sales is due to the new GS model sport sedans (coming in October) and the RX sport utility (coming in March 1998).
On the road again . . . : a study in the New England Journal of Medicine showed that long-haul truck drivers in the U.S. and Canada don't get as much sleep as they need to be alert while driving. The study reports that in one out of eight trips, drivers did not take a full eight-hour break between shifts. If they did take breaks, they did not always sleep. In fact, they managed to get only 4.5 to 5.75 hours of sleep per day. In the U.S., 110,000 people are injured and 5,000 killed in commercial truck accidents every year. The National Highway Traffic Safety Administration also reports that 1,500 people die and 76,000 are injured each year from drivers falling asleep behind the wheel. The bottom line is be sure to drive on plenty of sleep, especially on long trips.
Volvo recently announced that it will not enter the European small car market that some of its competitors are rushing into. Volvo claims that it cannot build a small car and still meet company safety standards. The S40 which competes with BMW's 3-series and Mercedes C-class is the smallest car that Volvo is willing to make because it felt it could not put its name, synonymous with safety, on a small car.
Saving the best for last, Porsche recently unveiled its new 911 in Frankfurt, Germany. The new Porsche 911 sports a completely new interior while still showing some resemblance to 911's of old. Because current 911's continue to sell as fast as Porsche can produce them, and because the 911 design has such a legendary place in Porsche history, the company will continue to use the 911 name and keep the body looking like the 911 we know today. However, the car itself is completely new from the ground up. Internally at Porsche, the current 911 is known as the 993, but this design will be dropped for the new 996 design which is both longer and wider than the current 911.
Most disappointing for me, Porsche will drop its fabulous air-cooled motor for a new water-cooled one that produces less emissions (that's OK) and is quieter (that's not). The company says that 10 of the new motors make as much noise as a single motor from the 1966 version of the 911. The good news is that the interior is bigger and the car is faster. To achieve greater economies of scale, Porsche designed the new 911 so that many of its parts are interchangeable with the new Boxster (see the special 1997 summer/graduation edition of The MSJ). The price will increase by two percent, and the new 911's will be in showrooms this coming autumn. I can't wait
This week marks the beginning of a new column in The MSJ devoted to the financial markets. Any ideas, opinions, or articles for publication would be greatly appreciated. Please submit them to tmaz@umich.edu.
Year 2000 bug: A time bomb for technology stocks?
Anyone not living in a plastic bubble has probably heard some of the doomsday hype surrounding the Year 2000 (Y2K) issue. Many legacy software applications have difficulty dealing with dates beyond 1999 because they were programmed using two-digit year formats to represent date fields (i.e., 1998 depicted as "98"). As a consequence, many computers will not be able to distinguish between 1900 and the year 2000. Unless a massive, software re-coding effort is completed, everything from ATM machines to telephones and traffic lights will fail on the morning of January 1, 2000 (one glorious hangover). The Gartner Group officially estimates the global cost of fixing the Y2K problem at a cool $600 billion over the next several years, with the average major corporation spending approximately $50-$100 million to solve it.
Some winners, more losers. Although Y2K spending will benefit a select group of system consultants and COBOL programmers, the overall technology sector may get bruised. Keep in mind that there are no silver-bullet solutions; fixing the bug is an extremely labor-intensive process that involves sorting through millions of lines of code. The pool of qualified software engineers is tapped-out (even in India) and, as a result, Y2K labor costs are rising at approximately 30% every six months as more companies begin to implement and test solutions. The experts are predicting that corporations will slam the brakes on other technology spending as IT managers are asked to absorb the biggest, one-time technology cost in history. Discretionary, non-mission critical IT dollars will likely be diverted to fund Y2K. In fact, the Society of Information Management estimates that Y2K will consume nearly 25% of corporate IT budgets in 1998 and 1999.
So, what's the play? Well, hardest hit by the pending IT budget crunch and technology purchase deferrals would probably be the bellwether hardware, software, and peripherals industries that rely heavily on corporate sales. For example, are companies really going to upgrade to Windows 98 and replace their existing Pentium 166's with the fastest Pentium II's when they are scrambling to throw enough resources at Y2K? In addition, many corporate Internet and intranet projects may also fall victim to discretionary spending reductions.
Wall Street analysts, appear to be completely oblivious to these scenarios and even a 5% hit to 1998 revenue numbers would wreck havoc on their already overoptimistic earnings models. Any near-term extension of the tech rally could provide an excellent opportunity to sell.
Happy New Year.
So, did they send the company comedian, or is everyone at XYZ Company that entertaining? How could Outoftheway, U.S.A., be such a perfect place to live if I can't find it on a map? Do managers really spend most of their time in cross-functional teams, or do they conspire with our B-school professors to convince us it makes sense to spend hours in a group, outlining the five forces? What's it really like to be there, to be a player, to be in the company?
Enter Day in the Life (DITL)! This year the DITL program marks its fourth anniversary as one of the most remarkable opportunities for first-year MBAs. Thanks to the dedicated efforts of Global Blue Alumni Network representatives, companies from all industries have agreed to host two to four students each for on-site shadowing experiences. They are jumping at the chance to interact and discuss industry trends with dynamic MBA1s, and students can anticipate exposure to the people, culture and day-to-day activities of these firms.
The finalized list of participating companies, with contact information for each, will be in MBA1 mailfolders Friday, September 26. Office hours to discuss opportunities with your Global Blue representatives will be Monday, September 29 from 10:00 a.m. to 2:00 p.m. in the Student Lounge. You then have less than one week (until 2:00 p.m., Sunday, October 5) to put together a cover letter and résumé for each company in which you are interested to visit. Choose a field about which you are unsure in order to narrow your career focus; apply to your dream company just to confirm what you already know; or experiment in an industry of which you only recently became aware. Whatever your rationale, this is your chance to go for it.
Global Blue collects and forwards the resumes; and student selection is at each company's discretion. Those students chosen will be notified by Global Blue via letter on Tuesday, October 24. Individual students are then responsible for arranging a mutually convenient date for the DITL visit, which must occur before (December 31, 1997). On a final note, all student participants are required to submit a 300-word summary of their experience within two weeks of their visit. These articles will be published in The MSJ, and a copy will be forwarded to the host company.
So, hold on to that blue DITL brochure, start sprucing up your résumé, draft those cover letters, and get ready to make it happen