Mays Impacts

There’s more to business than balance sheets and the bottom line. That’s what sophomores at Mays Business School at Texas A&M University are learning in their Integrated Worklife Competencies class, where a large part of the grade depends on a team project that contributes at least $1,000 (or 100 hours of volunteer labor) to a local non-profit organization.

The more than 600 students involved in this class will present their projects at a service fair this Tuesday and Wednesday, December 1 and 2. Representatives from the agencies the students worked with will also be present. The fairs will be held in the lobby of the Wehner Building on the A&M campus from 5:30 to 9 p.m., with a break from 7-7:30.

“Our teams are charged with creating $1,000-worth of value for their chosen agency,” says Nancy Simpson, clinical professor and director of the Undergraduate Special Programs Office at Mays. “For the purpose of the project, we value their time at $10/hour; however we emphasize that they create value by identifying and meeting need, not simply by putting in hours. The project also serves as a vehicle for learning about teams, business communication, and ethical decision making.”

The students chose their own projects, partnering with community organizations such as the Brazos Valley Children’s Museum, The Down Syndrome Association, Scotty’s House, Red Cross, Habitat for Humanity, and the Texas Ramp Project, to fulfill a specific need within that organization.

One team, Aggies Contributing Dollars for Cans (ACDC), turned a common student dilemma into an opportunity for the Brazos Food Bank through their service project. At the end of the semester, students frequently have unused “dining dollars” remaining in their pre-purchased meal plans. They can only carry over $100 of that money to the next semester, forcing them to lose the money or spend it on non-essential items such as junk food at Rattlers, the campus convenience store that accepts the meal-plan money but offers a very limited selection of products. Team ACDC worked with campus dining services to create a third option for students: they can now donate their unused money to feed the hungry in the Brazos Valley. This is the first semester that this option has been available, so the group is unsure of how much money will be raised through the effort, though they expect it will be substantial, says team rep Aaron Ebers ’12. Though the class only requires students to participate in their service project for one semester, Ebers says if their campaign is as successful as they expect, they will turn the class project into a student organization on the A&M campus and encourage students to continue giving each semester.

Team Ranch Hands spend their volunteer hours mentoring and tutoring the children at Still Creek Ranch in Bryan, Texas. The ranch provides a home and schooling for disadvantaged children, and is supported entirely by private donations. In addition to their mentoring activities, the A&M students assisted in the ranch’s annual fundraising dinner and silent auction. Team representative Kelly Bryan ’12 said that the experience, while personally touching, was very instructional, as team members learned how to interact professionally with a non-profit organization.

These projects and more than 80 others will be judged during the two-day service fair by a panel of faculty and staff members. Winning groups will win scholarship money for group members based on the success of their projects and presentations.

For more information about the students’ projects or the service fair, please contact Simpson at (979) 845-4140 or njsimpson@mays.tamu.edu.

Tom Kirkland had a dilemma. He was offered the job he really wanted in a great city, working for a major accounting firm. The only problem was that he had, only 24 hours previously, accepted a different job—one that he was much less enthused about. He thought about calling his new employer and rescinding his acceptance, but his father’s words held him back: “Son, you made a commitment. You should stick by it.”

“The first job of a leader is to inspire trust,” Tom Kirkland ’76 told students during a recent visit to Mays with his wife and business partner Melinda ’83. (view more photos)

After agonizing over the decision, he followed his father’s advice. More than 30 years later, he says he’s glad he did. “I believe in providence, not chance,” he says. “I think we are where we are supposed to be, and we are supposed to make the best use of where we are at that particular time.” Looking back, he says if he’d taken another path, he might not be where he is today, sharing the helm of TEKMAK Development Company with a great business partner—his wife, Melinda ’83.

Tom, who holds a degree in accounting from A&M and a law degree from South Texas College of Law, became interested in real estate development for a practical reason: when he would travel for business to the Round Rock/Pflugerville area, he’d have trouble finding a hotel room. Where others would have seen those “no vacancy” signs as an annoyance, he saw opportunity. Why not build another hotel? The idea evolved into TEKMAK and, a few years later, they did open a Holiday Inn Express in Pflugerville, but not before opening a Hawthorne Suites in College Station. Since starting the business 10 years ago, the Kirklands have overseen the development and operation of seven hotels and one student housing facility (The Tradition at Northgate).

From these experiences, Tom says he’s learned something important: trust is vital to an organization and to the marketplace. Society is “in a crisis of trust,” he says, lamenting that a small percentage of unethical businesspeople has ruined trust in the marketplace for the majority who deal honestly.

“As we move rapidly into an even more transparent, interdependent, global reality, trust is more career-critical than it has ever been,” he said, quoting Steven Covey’s book The Speed of Trust. Nowhere is trust more important than at the top of an organization. “The first job of a leader is to inspire trust,” he says. If your employees don’t trust you, then your organization cannot perform at maximum capacity.

He mentions Covey’s “trust tax” concept: as trust decreases, the cost of business increases. The opposite is also true: as trust increases, business becomes more efficient and inexpensive. He recommends that business professionals thoughtfully practice trustworthiness until it becomes second nature.

To become a trusted leader takes more than making ethical choices, though, says Tom. Trust is a function of two things: character and competence. “Character alone is not going to get you trust,” he says. “You must also have competence.”

“The minimum daily requirement has now become the maximum daily effort…Give the maximum daily effort. You’re going to be a lot more successful.”
—Tom Kirkland ’76

Another key ingredient to the Kirklands’ success has been their accountability to each other. Tom jokes that he’s a “Fire, ready, aim guy,” and that Melinda keeps him from making hasty decisions. Melinda, who earned a degree in management from A&M, serves as the purchasing manager for TEKMAK. Find a partner that “fills in your gaps,” that is, whose strengths complement your weaknesses, says Tom. And you don’t have to be married to your business partner to find that kind of relationship, adds Melinda.

However, “it is important to find a partner that supports your dreams,” says Tom, recounting how Melinda encouraged him to leave the stability of his job at a law firm to start building hotels—a business which he knew very little about. TEKMAK has seen some challenges (both mentioned the difficulties they encountered while building The Tradition at Northgate), but the Kirklands have remained a committed team while meeting these challenges.

Things don’t always go according to plan, says Tom. “You can do one of two things: you can quit and feel dejected and despondent, and feel sorry for yourself; or you can do the opposite and you can persevere. You can figure out how to make it work.” It’s obvious that the Kirklands have figured out how to do just that.

The Kirklands recently visited Mays Business School to guest lecture. The couple lives in Dallas and have two children, one of whom is a student at Mays.

Think you might like to leave the security of your corporate position and hang your own shingle in the marketplace? There are a few things to consider before you make that leap into the unknown, says Kent Bettisworth ’75, founder of Bettisworth & Associates, Inc. First, study the market and determine your value, then do the math: is your knowledge worth roughly twice your salary? If not, you may wish to reconsider. Also, scan the horizon for potential threats that could scuttle your business.

These are lessons Bettisworth had to learn the hard way, as his first business failed. His short-lived venture Infofax (made obsolete by the introduction of the Internet), taught him some important lessons about self-employment that he shared with students at Mays Business School on a recent visit. Speaking to an introduction to management class, Bettisworth discussed the pros and cons of entrepreneurship, as well as generalities for how to succeed in business.

Lesson number one: Always have two plans to success, your Plan A and your fallback.

Bettisworth encouraged students to consider where they want to be in 40 years and then to consider their two plans for getting there. He walked students through his own career path, illustrating his two-plan philosophy, starting with his ambition as a young man to become a naval officer. He planned to attend a university with a naval ROTC program so that he could graduate with a commission, but he had better scholarship opportunities at A&M, which at the time didn’t have such a program. He joined the Corps of Cadets at A&M and intended to pursue Plan B, attending a naval officer candidate school after graduating. Eventually, A&M added a Naval ROTC unit, so he was able to graduate with a degree in management as well as an officer’s commission in 1975. He spent three years on a ship seeing the world, while planning his next step and his two plans to make it happen.

He obtained an MBA while teaching ROTC at the University of Texas—Austin, then went to work for ExxonMobil for 14 years. He left naval active duty, but continued to serve in the Naval Reserves, keeping the military as his Plan B alternative.

In 1995, he left Exxon to start his own business working with companies to incorporate SAP (systems, applications, and products) software. Bettisworth advised students to be on the watch for great entrepreneurial opportunities, those that are “eye-poppin’ and jaw-droppin’.” He suggested they become knowledge experts—and it’s a bonus if your area of expertise is one that is important but that everyone else thinks is boring, making you a rare commodity. Bettisworth’s consulting business deals primarily with valuation of fixed assets. “I belong to the Society of Depreciation Professionals. How boring can you get?” he joked. But no matter what the area, “Do what you love. Have a passion for it. You will be successful if you do.”

The airline industry: It’s a business where one-third of the fixed expenses (fuel) can fluctuate wildly at the discretion of world politics and another third can be strong-armed by labor unions, while the revenue stream is forever feast or famine depending on the economy, pandemic fears, the time of year, and a thousand other unpredictables. It’s capital intensive, as airplanes can cost tens of millions of dollars each. Oh, yeah, and there are constant bankruptcies and mergers. Sounds like a great place to make a career, right?

“The airline industry is very volatile,” said Michael Cox ’77. “It’s got more downs than ups, but it’s the lifeblood of commerce around the world.”

It has been for Michael Cox ’77, who has worked in the airline industry in some capacity for more than 25 years. “It’s a very dynamic environment…it’s probably one of the worst industries in the world from a return standpoint because there are so many variables to screw it up,” he said, noting at the same time that there are also tremendous opportunities within the industry.

“The airline industry is very volatile…it’s got more downs than ups, but it’s the lifeblood of commerce around the world,” he said, describing that volatility as appealing to many, including consultants.

Cox is the managing director of the Seabury Group, a consulting firm that caters to the needs primarily of commercial aviation clients, such as Delta, Frontier, Air Canada, China Eastern, Air New Zealand, and Singapore Airlines. Before joining the firm in 1998, he learned the business working for Continental Airlines, where he started as an analyst and made his way up to vice president and treasurer positions. During his time at Continental, the company went through two bankruptcies, so Cox knows whereof he speaks when he consults with airlines in financial distress. “The joke was they didn’t pay us in money, they paid us in experience,” he said. But the experience has paid off, as it led him to a very successful career in consulting.

With all the turmoil in the industry, it’s a great time to be a consultant.

Airlines have taken a major hit during the recession as people are taking fewer pleasure trips and businesses are cutting back on travel expenses. It’s the latter that hurts most, as business class airfare can cost ten times economy class. Though analysts are saying that the economy is starting to turn around, Cox says the forecast is still bleak for airlines. “It’s going to be an ugly environment for airlines for some time to come, at least until the balance of supply and demand returns to equilibrium,” he said.

“The joke is, you know how to make a million dollars in the airline industry? Start with a billion.”
— Michael Cox ’77

Airlines have responded to this crisis through consolidation, capacity cuts, and selling off assets to raise cash capital to stay competitive. “It’s an extremely competitive business,” he said noting that “like a wolf would jump on a wounded rabbit,” airlines all watch each other for signs of distress so that they can drop fares in certain areas to finish off a struggling competitor. Cox sees consolidation as a healthy thing for the industry, comparing it to the Big Three U.S. automakers: the market can only sustain so many big carriers. However, sticky issues can arise with federal regulation of these mergers for antitrust measures.

While the airline industry is currently in a down cycle, there are good things on the horizon, says Cox, who mentioned new technologies that will soon enable flights to go further, eliminating some connection flights and opening new markets.

Cox is a self-described “propeller head.” “I’ve always been fascinated by airplanes.” His passion for his work is hard to miss as he shared some of his career highlights, such as saving an airline from going under in one week, or remaking South African Airways into a profitable business with a new corporate culture. “It became my baby,” he said. “I was very proud of our accomplishments.” It’s that kind of drama that keeps Cox in this career, which constantly stressful and not at all conducive to a quality family life. The job appeals to his desire to fix things. Even after all these years, he’s still thrilled by the opportunity to turn around a company in distress, snatching it back from the brink of bankruptcy.

Mr. Cox received his MBA in finance and accounting from the University of Texas at Austin and his BBA in business management from Texas A&M University. He visited Mays Business School in November to share his experience with students.

Entrepreneurs from Thailand, Texas, and many places in between, representing an array of industries from construction to computer technology, gathered in the Zone Club at Kyle Field on the Texas A&M University campus to celebrate the things they had in common: 1) They were all Aggies. 2) They were all extremely successful business people.

This year’s Aggie 100 honorees represented a wide variety of industries, including dentistry, veterinary, construction, truck freight matching, and an online virtual zoo.

The Aggie 100 recognizes the 100 fastest growing Aggie-owned or —operated businesses in the world, as gauged by the company’s compound annual growth rate over a two-year period. The 5th annual Aggie 100 list was announced on Friday, November 6, at a lunch hosted by the Center for New Ventures and Entrepreneurship (CNVE) at Mays Business School. Claiming the top spot for 2009 was J.C. Schoel ’00, founder and vice president of sales and business development at Andersen Schoel, a contract office furniture business established in Harker Heights, Texas in 2002. Andersen Schoel experienced a whopping 287.54 percent growth rate for the 2006-2008 period.

Of the top 10 companies on the list, four were led by Mays graduates: Kelly Jones ’83, CEO, owner, and founder of Digital Discovery Corps; Ryan Reichardt ’04, president, owner, and founder of Reichardt Construction; Frank Tanner ’87 and Jeff Mackey ’87, founders and owners of Mackey & Tanner; and Clay Schlinke ’94, owner of Tesoro Homes & Development.

Richard Lester, director of the CNVE and master of ceremonies for the event described the Aggie 100 companies as the “backbone of the American economy,” and commended them for their outstanding progress in the face of less than ideal economic conditions.

The Aggie 100 companies account for 10,000 employees and $7.6 billion in annual revenues.

Though half of the honorees on the Aggie 100 list were repeats from a previous year—including MacResource and New Tech Engineering, which have been on the list all five years—the top dog, Andersen Schoel, was a first-timer.

Schoel says his original idea was to start a business with his father once he completed his military service. They planned to sell furniture in the education market as an add-on to the teacher-resource stores that his mother owned. However, their market research revealed another opportunity: selling to the military. In less than a decade, their business has grown exponentially, servicing corporate clients as well as government agencies. They now also provide design, installation, and office relocation services.

Schoel, who graduated with bachelor’s and master’s degrees from A&M in industrial distribution, says being named to the Aggie 100 won’t be a one-time deal: he intends to make the list again next year. He’s planning expansion, adding a second location, even amidst a down economy.

Schoel had advice for the audience regarding the recession: Imagine a river. When the river is high, you can’t see the rocks. “When the river is down, that’s the time to get the rocks out of the way,” he said, so that when the river rises, you can have a smoother ride than before.

Notable numbers

Accounting firm PKF Texas crunched the numbers for the Aggie 100, ranking each of the businesses. Interesting statistics that arose are:

• The number 100 company had a compound annual growth rate of 19.48 percent. The number one company’s was 287.54.
• Nine of the companies ranked were owned or operated by someone named Michael or Mike.
• Three father-son teams made the list, including the top company.
• The Aggie 100 companies account for 10,000 employees and $7.6 billion in annual revenues.
• Class years of recipients ranged from 1959 to 2005. Class of 1990 was the most represented year on the list.
• The businesses represented a wide variety of industries, including dentistry, veterinary, construction, truck freight matching, and an online virtual zoo.
• Companies were located in seven states and seven countries.
• Half of the honorees are graduates of the A&M Look College of Engineering.

Owner of several industrial services businesses, Phil Miner ’80 didn’t make the top ten, but his achievement is worth noting: at least one of his businesses has made the list each year, setting the record with a total of 10 Aggie 100 recognitions. In 2009, his companies made the list three times.

The purpose of the Aggie 100 is twofold: to celebrate the achievements of successful alumni, and to bring those entrepreneurs into the classroom as guest lecturers so that current students can learn from them. Thirty-five of the 100 honorees spoke to classes across campus. Honorees also purchased tickets for 100 students to attend the lunch ceremony, enabling them to be inspired by successful former students and to build their professional network. “That’s part of the real power of this event,” said Lester.

Nominations for the 2010 Aggie 100 will begin January 15. Applications will be accepted May 1 through June 30. Email Lenae Huebner, assistant director of CNVE, if you have questions.

About The Center for New Ventures and Entrepreneurship

The Texas A&M Center for New Ventures and Entrepreneurship provides encouragement, education, networking and assistance to entrepreneurially minded students, faculty and Texas businesses. Founded in 1999, the center is part of Mays Business School’s Department of Management. The center enhances student education through campus speakers, competitions, work experiences and financial support. The Texas A&M faculty and Office of Technology Commercialization benefit from the center’s educational programs, extensive business community network and the entrepreneurial services. The center also reaches out to the state’s business community offering educational programs, business assistance and access to university resources. The center is supported by corporate and individual members and sponsors who believe in the value of an entrepreneurial education program and the value of Texas businesses working with Texas A&M University.

For more information

• Aggie 100 web site
• Photo Gallery: 2009 Aggie 100 Luncheon and Reception

BusinessWeek has recently recognized the Executive MBA Program at Texas A&M University’s Mays Business School among the world’s best. The 2009 BusinessWeek rankings place the program among the top 50 in the world, based on surveys of graduates and program directors. To see the entire listing and to read more about BusinessWeek‘s methodology, visit bwnt.businessweek.com/bschools/emba_rankings_2009/.

BusinessWeek‘s methodology ranks the top 25 schools and recognizes the second 25 in an unranked list of leading Executive MBA programs. Although not ranked in the top 25, the Mays program is listed in the second 25, the first time that BusinessWeek has recognized the program in its bi-annual rankings.

About the Texas A&M Executive MBA Program

The Executive MBA Program from Mays Business School at Texas A&M University is a rigorous educational program designed for qualified business professionals. Based in The Woodlands, just north of Houston, the two-year program is built on an innovative curriculum that focuses on creating value in your organization. Through peer discussion, case studies, and dynamic interaction with our accomplished faculty, the Executive MBA Program provides our participants with skills and learning they can put to work immediately. For more information, please contact the Executive MBA office at emba@tamu.edu.

Mays Business School is a large place. Because we are large (we have more than 4,200 undergraduate business students), our students have access to leading corporations, guest speakers in classes, and the Aggie network during their studies at Mays Business School.

Yet each student has an experience of one, so what do we do to bring the advantages of small to them? How can they receive individual attention and make connections that are meaningful? I’ll mention just two ways that Mays Business School is a small place.

Mays is in its ninth year of offering the Freshman Business Initiative, which places our freshman students in small cohorts that are mentored by a sophomore or junior student. The FBI (as it is known) is offered to all incoming undergraduate students. A thousand students broken into groups of 12 is a large program to run, and its impact on their experience at A&M is big, though hidden in small numbers.

Texas A&M University began offering freshman seminars that have fewer than 15 students per class, with the intent of giving these new students the opportunity to interact closely with a faculty member. I am in my second year of leading one of these seminars using the Wall Street Journal as a textbook. Meeting once a week, we discuss current events through the business media lens. The class also develops the students’ oral and written communication skills. This class provides me with the opportunity to open students’ minds to the joy of learning while keeping me connected to the youngest of Aggies.

So, while Mays is a big school in terms of size, we are a small school in terms of attitude. The result? Our students get the best of both worlds. It’s an exciting era for us as we develop leaders for a global society.

C.K. Prahalad cites the innovative efforts to replace smoky chulha stoves (seen above) as an example of the “fundamental reset” that’s occurring in the business world today.

A sari clad housewife in rural India coughs as she cooks over a smoky “chulha” stove, burning wood or cow dung for fuel. The walls around the cooking area, like her lungs, are smeared with black residue. The amount of toxins she breathes in while preparing meals for her family each day is equivalent to 20 cigarettes. She coughs again, her eyes burning from the smoke. She wishes there were another way to cook, but she, like millions of other poor people in the world, can’t afford a better stove.

Until now.

A new product was recently unveiled, designed specifically for the needs of the poor. The Combination Chulha is smokeless, can use biomass or natural gas, is durable, and most significantly, it’s affordable. It is also better for the environment (it has less carbon emissions than her previous method of cooking) and good for the local economy, as housewives are becoming entrepreneurs, selling the stoves.

What’s brilliant about this story is easy to overlook—a company saw the opportunity embedded in poverty. It’s a concept that has transformational significance, says C.K. Prahalad, who is excited about the opportunities that exist at the bottom of the wealth pyramid. Opportunities to make money, yes, but also to change the world.

Prahalad, an author, educator, and businessman of renown, recently spoke to students at Mays Business School about the changing landscape of global business.

“I believe we have a huge opportunity to build a world that’s totally different from what we’ve inherited. We cannot get to this place through analysis. We must imagine this world. We must have personal courage, passion, humanity, and humility. We cannot analyze our way into this opportunity, we must imagine our way into this opportunity.”

— C.K. Prahalad

Need spurs invention

Volatility is everywhere: Climate change; terrorism; genocide; pandemic flu; unpredictable consumer reactions; wild swings in commodity markets such as oil; major shifts in government in the United States, India, Japan, and Russia; and let’s not forget the global recession. “It’s not just a financial crisis,” says Prahalad, The crisis is all encompassing

C.K. Prahalad speaks to Mays faculty and students at the inaugural Dean’s Distinguished Scholar Lecture.

But don’t panic. With adversity comes innovation. The opportunity before us now? The total transformation of business.

“In a range of industries there is a fundamental reset that is taking place,” says Prahalad—a boon for young people entering the marketplace, as they will be on the cutting edge of this change, with the opportunity to influence the way we do business in the future. According to Prahalad, a new economic model is rapidly emerging, one that will be characterized by low capital intensity and increased customer intimacy, paired with new consumption patterns.

As in the example of the combination chulha, Prahalad says we are moving from a firm-centric society to a consumer-centric society—one where consumers dictate what products are made and at what price they are sold, and businesses respond with products tailored specifically to the needs of their audience.

Prahalad points to the Build-a-Bear Workshop as another example as it’s a highly customized product, tailored to the individual customer (an “n=1” business model). While the product is a teddy bear, what consumers are spending their $80 on is an individualized experience. This is in direct opposition to the traditional toy industry model, which focuses on mass production of a homogenized item at low cost.

As the recession makes paupers of more and more of the population, Prahalad says that businesses need to figure out how offer Build-a-Bear service at a price that is affordable to the world’s poorest. Like Jaipur Foot (jaipurfoot.org), an Indian company that creates high-quality prosthetic limbs—an n=1 product, as each limb must fit the patient precisely—for about $35 a piece. That’s mere pennies on the dollar for what an amputee would pay for a prosthetic in the U.S., where artificial limbs can cost $10,000 to $15,000.

How is it possible to offer a quality product at that kind of price? It’s the old adage, “necessity is the mother of invention.” Prahalad says in the U.S., where people have money and insurance, there isn’t such a focus on super-low design cost. In India, where extreme poverty is widespread, engineers are forced to work smarter to create a product at an affordable price.

Because if it’s not affordable, it won’t sell. If it doesn’t sell, the business dies.

Connectivity fuels the future

In addition to innovation from the bottom up, Prahalad sees connectivity as the major transformative element in business today. How would it change business, he asked, if every person in a company contributed to projects in a wiki format, so that the talents of each are fully utilized?

On a larger scale, Prahalad asked his audience to consider how to improve a cardiac pacemaker. If they aren’t improved via obvious means—making them smaller, cheaper, or with a longer battery life—how could they be made better? By making them an n=1 product: monitor the activity of each patient’s pacemaker; when it’s activated due to a heart problem, a computer would send an automated text message to the patient; if medical attention is needed, the patient would receive directions to the nearest hospital, where the staff would be notified of his impending arrival and his medical records would be sent so that his care would be immediate and accurate.

This sort of service can’t be offered by one provider, but it is possible with a network of providers working together in a complex ecosystem. Eventually the idea of a supply web will replace the traditional supply chain. And that, says Prahalad, is the future of business. As consumers demand more personalized products, connectivity can make it possible.

We are in a new age of innovation, he says, one where every consumer has a voice and where information and commerce are becoming democratized. “I believe we have a huge opportunity to build a world that’s totally different from what we’ve inherited,” he said, commenting that every person must have access to high quality products and services, as well as the means to buy them. “We cannot get to this place through analysis. We must imagine this world. We must have personal courage, passion, humanity, and humility. We cannot analyze our way into this opportunity, we must imagine our way into this opportunity.”

The past, present, and future of Mays Business School were embodied in the three guests of honor as the Benton Cocanougher Chair in Business was dedicated at a luncheon on October 23. Special guests by invitation of Dean Jerry Strawser were in attendance, as well as the men of the hour: Lowry Mays ’57, founder of Clear Channel Communications and benefactor of Mays Business School; Benton Cocanougher, dean of Mays Business School from 1987 to 2001 and current dean emeritus and professor emeritus at Texas A&M; and Luis Gomez-Mejia, professor of management and inaugural holder of the Cocanougher Chair.

(Left to right) Luis Gomez-Mejia, Lowry Mays ’57, Benton Cocanougher, and Jerry Strawser ’83 at the dedication of the Benton Cocanougher Chair in Business.

Mays, who funded the chair with his wife, Peggy, spoke warmly of Cocanougher at the event, saying that “Benton has been a very close friend of our family for a long time.” Cocanougher was dean of the business school when Mays endowed it with a gift of $15M in 1997. Mays said he was impressed with the leadership Cocanougher provided to the business school, and continues to provide to A&M. “He’s a great teacher and an incredible leader on this campus,” said Mays, who compared Cocanougher to the 12th Man for his willingness to serve A&M wherever there is a need. Presently, he is interim dean of the George Bush School of Government and Public Service and prior to that position, he was interim chancellor of the Texas A&M University System.

Cocanougher thanked Mays for the honor of the gift naming and for his continued involvement with the school. Cocanougher commented that as important as Mays’ original gift to the school was, branding the school with his name was even more impactful. “Lowry built a great corporation, but he was also instrumental in changing the very nature of the communications industry and he did it all with an unblemished record and a commitment to public service,” he said. “And that’s a very special asset for any academic program.”

“Through their generosity, Peggy and Lowry Mays are improving the lives of tens of thousands of people,” said Cocanougher, mentioning the Mays’ many other charitable endeavors. Their recent activity at Mays Business School was in the amount of $7.5 million with matching funds to create a $12 million gift; this gift is dedicated to faculty support and will provide six faculty chairs and three eminent scholar chairs, including the Cocanougher Chair.

Gomez-Mejia joined A&M in fall 2009 from Arizona State University. He is highly regarded globally as an expert in his field. “A&M for me was always the pinnacle, so it still seems sort of unreal that I’m here,” he said. He acknowledged that the honor of being the first to hold the prestigious chair, named for and created by two such important men, came with a certain amount of pressure for his performance. “I will try to keep your good name up,” he promised.

Can a privately owned regional grocery chain succeed with national brand competitors such as Walmart and Kroger? How has the recession impacted grocery stores’ share of stomach and how people shop?

And, when I graduate, why should I consider working at H-E-B? Aren’t I earning a college degree so that I don’t have to work at a grocery store?

Scott McClelland, president of H-E-B food and drug for the Houston region, speaks to business students as part of the third annual H-E-B Day at Mays.

These are the type of questions that were discussed during the third annual H-E-B Day at Mays Business School at Texas A&M University on October 14. The event, hosted by the Center for Retailing Studies at Mays, invited executives from H-E-B to speak to classes of all disciplines within the school, from agribusiness to accounting, giving practical lessons on topics such as assortment, marketing and promotions, and innovation. Executives, including presidents, vice presidents, and directors, addressed more than 2,300 students in 20 classes.

For most college students, H-E-B is the place to look for Ramen noodles and Coke, not a career. However, with 325 stores in Texas and Mexico and annual sales in excess of $15 billion, the privately owned Texas grocery chain may be worth a serious look from business school grads said Scott McClelland, president of H-E-B food and drug for the Houston region.

According to McClelland, the recession has been great for the grocery industry, as people are eating at home more than they were when they had more discretionary income. He introduced students to his “share of stomach” concept: the stomach as a pie chart, indicating where percentages of food came from—grocery store, restaurants, vending machines, etc. As people tighten their budgets, restaurants share of stomach decreases, while the grocery store share increases. McClelland joked that in the grocery business you hope for recessions and hurricane scares, as both drive shoppers to the store.

Echoing his thoughts on the economy, Molly McAdams, vice president of Own Brands at H-E-B, talked with students about the strategy behind marketing each of the company’s five private label brands when she addressed an upper level marketing class. McAdams says that in a value economy, shoppers’ brand loyalty is challenged, and they are willing to switch from name brand to store brand items in order to save money. McAdams also talked about private label products, like H-E-B’s Easy Melt, that are equal to or superior to national chain brands, like Velveeta, but cost less. This gives H-E-B leverage over suppliers: by pricing Easy Melt well below Velveeta, they can sell more of the store brand, which helps them negotiate a more competitive price with Kraft Foods on their product.

McAdams informed students about the branding effort she has been involved with at H-E-B after a customer survey revealed that shoppers weren’t aware of the difference between Hill Country Fare (the economy store brand) and H-E-B (the premium store brand). She shared about H-E-B’s efforts to differentiate and reinforce the brands through customer education. “Each one of [our brands] is really important to the portfolio, because in the world of H-E-B, we believe that every customer in our marketing area is our customer,” she said, emphasizing the spectrum of the store brands offered by H-E-B. “We want everyone shopping at our stores. What we always say about market share is that when it comes to market share, we don’t share…We’re not just looking for people that make a lot of money, we’re not just looking for people that are below the poverty line. We want everyone to shop at our stores.”

Senior Vice President Tina James talks about H-E-B’s corporate philosophy during her keynote address at a luncheon for guests, faculty and students.

On a related note, McClelland discussed the stratification of H-E-B store formats to meet the needs of diverse demographics. The chain offers traditional grocery stores, in addition to H-E-B plus stores, which carry a greater selection of general merchandise and have increased service; Mi Tienda, a grocery store aimed at the Hispanic population; Central Market, the store for “foodies,” which sells organic and natural items; and coming soon, SmartShop, a smaller grocery format with a focus on economy. He presented about assortment across each of the store formats and the shifting assortment needs across the state. “People in Houston don’t shop the same way as people in San Antonio,”—or from one end of Houston to the other, he said, discussing the differences in the population within a single community. To maximize H-E-B’s profitability, a retailer must be nimble enough to offer store formats and assortments that suit the customer. This flexibility has enabled H-E-B to stay in the game when other grocery chains have collapsed due to turmoil in the marketplace.

H-E-B is a corporate sponsor of the Center for Retailing Studies at Mays, so their visit was two-fold: while in the classrooms to teach, the executives from H-E-B were also there to recruit. McClelland invited students from all areas of business to consider a career at H-E-B, as the company has opportunities for marketing as well as supply chain majors and everything in between.

“One of the reasons why we are so committed to Mays is because we have tremendous success with Aggies, more so than people from other schools,” said McAdams. Last year, the grocery chain extended more employment offers to Aggies than all of its other target college campuses combined. This year’s recruitment goals exceed 50 new hires, making Texas A&M and Mays Business School the top university partner for H-E-B.