To create a company around a new technology requires both business acumen and technological know-how. To make the company successful, business people must know how to talk about science and to scientists. Scientists must learn the reverse—how to simply explain their highly technical product or process for business audiences.

This year's winning team at the Mays MBA Tech Transfer Challenge studied connection methodologies for interstitially insulated coaxial pipe.
This year’s winning team at the Mays MBA Tech Transfer Challenge studied connection methodologies for interstitially insulated coaxial pipe. (view more photos)

That was one of the takeaways for Ryan Goodnight, a member of the winning team of the 2010 Mays MBA Tech Transfer Challenge (TTC) hosted by the Center for New Ventures and Entrepreneurship (CNVE). With his background in engineering (he holds both bachelor’s and master’s degrees in aerospace from A&M), he says he had to learn how to communicate at a lower level, explaining essential information without overwhelming the audience. That was indeed a challenge, when the average reader might have difficulty even pronouncing the name of the technology (“connection methodologies for interstitially insulated coaxial pipe”), let alone understanding its function and place in the market. Goodnight describes his team’s technology as a tube within a tube that uses wire mesh, Mylar film, and air as insulation between the two tubes.

Communication is one of the many soft skills enhanced by the annual TTC, which assigns a group of four or five first-year MBA students to a technology created at A&M and asks them to determine if the product is marketable. The process is a meaningful learning experience for the students; it also provides business insight to campus inventors who are working to bring their ideas to market. Several past TTC technologies are currently on the market or in final stages of testing including the med-tech companies MacuCLEAR and CorInnova.

Participation in the challenge is part of the MBA curriculum. While students are allowed to choose their teammates, the technology is assigned randomly. Presentations are not judged on the merits of the technology, but rather the students’ effectiveness at evaluating its marketability. The depth of their research (which includes market analysis, potential barriers to market entry, and competition), as well as their presentation skills and evidence of product knowledge during the Q&A with judges, determines the winners.

The major challenge, says Goodnight, was to fully grasp not only a new technology, but to also determine if the product has business viability—all in the span of one week. The level of research necessary was intense, involving lots of reading as well as interviews with professionals that could provide them with a better picture of the market. The time limit created a real-world experience, since he may have to make quick decisions on the job about the attractiveness of an investment in a new technology.

Goodnight says that his team was fortunate to find professionals in the oil and gas industry that could advise them throughout the process. While potential competitors in the market didn’t want to share information, others were happy to help the group of students prepare, briefing them on the technologies currently available that might impact potential sales of their product.

A panel of more than 100 judges, MBA class peers and faculty members reviewed the presentations of the top teams.
A panel of more than 100 judges, MBA class peers and faculty members reviewed the presentations of the top teams.

Goodnight and teammate Alvaro Acosta set out to win the competition months in advance, as they started scouting out classmates to recruit to their team. “Our goal from the beginning was to win,” says Goodnight. “We wanted a diverse team of people who were not only good presenters, but that possessed excellent knowledge over a broad base.” They took on William McCauley and George Holzwarth to complete their team.

The final presentations took place on February 18. Sixteen teams comprised of 66 MBA students presented, in oral and written form, first to a panel of 20 to 25 judges, The top five teams presented to a second panel of more than 100 judges, MBA class peers and faculty members. A wildcard round consisting of the second place technologies from the earlier panels produced a sixth finalist.

The top three teams were rewarded with more than new knowledge: cash prizes from sponsors Paragon Innovations and Sterling Bank ranged from $1,000 to $3,000 per team. ConocoPhillips was also an event sponsor.

Goodnight says he got something better than money out of the challenge—an interest in an entirely new field of business. He had no previous experience or interest in oil and gas, but now he is expanding his career ambitions to include that field. He is currently considering an internship in the industry.

This year’s top three teams, technologies, and inventors were:

  TEAM TECHNOLOGY INVENTOR(S)
First Place Alvaro Acosta, Ryan Goodnight, George Holzwarth, William McCauley Connection Methodologies for Interstitially Insulated Coaxial Pipes/Tubulars Dr. Leroy S. Fletcher
and Dr. Charles Bolfrass (Mechanical Engineering)
Second Place Laura Seago, Andrew Folkert, Erin Hause, Hossein Shahim Raman and Inversionless
Semiconductor Lasers
Dr. Alexey A. Beleyanin (Physics)
Third Place Philippe Thaim, Paul Christensen, Telyn Joseph, John Lineberger Implant Radiographic/Surgical Guide Dr. Raed F. Ajlouni (Baylor College of Dentistry)

Categories: Programs, Students

Beavers in red caps on tee shirts at the Taj Mahal, at Oktoberfest in Germany, on dogs, on babies, and on grinning families. These are images you’ll find on the Facebook fan page of Buc-ee’s, uploaded by the more than 94,000 enthusiasts of the Texas-sized convenience store chain. The pictures are evidence of the fervor many have for that ubiquitous beaver, seen on billboards around Houston and a few other parts of the state. The comments from these fans are more telling: fans pleading for new stores to be built, fans asking when they’ll be able to buy Buc-ee’s products online, and most of all, fans raving about the spotless and plentiful bathrooms.


Buc-ee’s founder Arch Aplin III ’80 told a group of Business Honors students about building his company’s wildly successful brand, “I can assure you, it was a slow process…there was no wow moment, no magic pill.” (view more photos)

Buc-ee’s Food Stores’ creator Arch Aplin III ’80, says there’s no secret to his retail success. When it comes to building his brand, the president and owner says his intention was to slowly and methodically become the best convenience store available for service and selection. “I can assure you, it was a slow process…there was no wow moment, no magic pill,” he says. In every decision he made as he built the chain, he sought the competitive advantage.

In this industry, it’s especially easy to see where competitors fall short and where that advantage can be gained: many convenience stores are grimy, dimly lit, over priced, cramped, and offer the bare minimum of products. Aplin turned the model on its head with his 30 stores, most of which are in the Houston-area.

Clean, friendly, and well stocked: that was Aplin’s motto when he opened his first store. Today, Buc-ee’s isn’t just a place to fill up; Aplin has made it a traveler’s oasis. His customers know that they will find more than reasonably priced gas at his stores. With homemade fudge, Buc-ee’s Jerky, and Beaver Nuggets, as well as all kinds of Texas souvenirs, fresh-made food, and sometimes even a costume-clad mascot, his customers frequent Buc-ee’s for an experience.

Aplin says he targets women with his stores specifically, hence the sparklingly clean and luxurious bathrooms, well-lit and security-camera-monitored gas pumps, and expanded shopping opportunity. There are many competitors in his business. Aplin says without this focus on differentiation, he would not be as successful.

He tells students that he sees his success like the Flywheel Effect described in the book Good to Great—continuous application of pressure makes the wheel spin faster and faster as its own momentum adds to the speed. “So that’s what I do. I push,” he said. No overnight success, no flashes of brilliance, only the steady application of force with the goal of customer satisfaction.

Having the competitive advantage isn’t a constant, he warns. “Once you earn it, there’s going to be a lot of people trying to take it away from you.” You must continue “to exceed customer expectations day after day on the basics.”

His customers have rewarded his efforts. Aplin says that the traditional convenience store model is for two-thirds of revenue to come from gasoline sales, and one-third from merchandise. His ratio is reversed—inside sales far outweigh gas. His goal is to eventually have the bottom line not depend at all on gasoline sales, though he will, of course, continue to sell the commodity.

Aplin briefly touched on issues such as access to capital and his cash-flow-to-debt ratio, noting that as an engineering student at A&M, he didn’t learn much about money management. He conceded that it can be hard to be passionate about balance sheets, but therein lies the raw material for success. Students asked about his plans for expansion and if he’s considered going out-of-state. “Growing is getting easier, now that I have that flywheel going,” he says, discussing other stores in development in Texas; he is also examining possibilities in Louisiana. He’s not interested in growing faster through franchising, though, as he fears the brand would be diluted by stores that might be of a lower quality. Growth will be slow and organic, with an eye to the long-term success of the company.

In the meantime, Aplin says he is in his sweet spot at the helm of Buc-ee’s, designing new stores, more clever billboards, and new ways to delight his fans. “Business is fun. I’m having a blast…I just love it.”

Categories: Executive Speakers, Former Students

If you wake up as Alan Mulally, it’s not as good as waking up as Warren Buffett, but nowadays it has to feel pretty close to it. Ford’s CEO and Automobile magazine’s 2010 Man of the Year, Mulally has shown himself to be a skilled leader, both at Boeing and at Ford. But even he knows it could have turned out very differently.

In November of 2008, he was being treated contemptuously by Congress and the media, along with Bob Nardelli of Chrysler (one of the all-time bad CEOs and worth a column of his own) and Rick Waggoner of GM, for his pay package. In the end, he really did not apologize for his salary and perks, and as is often the case, it turned out he was worth what he was making.

Mulally’s job was not an easy one. He took over his role from Bill Ford, who walked out the door scratching his head at what was apparently unsolvable slippage in the company’s fortunes. He cleaned house to the extent necessary and focused on cars the public wanted, including hybrids. He even seems to be succeeding with bringing back the Taurus. (Note: I have often told my students that the two great evils on earth are Enron and the 1995 Ford Taurus Wagon.)

But the most important thing Mulally did in his time of crisis was to state his values, and Ford’s, clearly. No bankruptcy. No bailout. We will do it ourselves, whatever it takes. Then he went out and got the financing to turn the boat. Now Ford has passed GM in unit sales. This may only be temporary, but it is psychologically empowering for his company, at the very least.

There is a moral component in these statements of self-sufficiency that resonates with the American people. They do not like sycophants like GM who take bailout money, and they do not root for incompetents like Chrysler’s Nardelli. They love to support folks who stand on their own. And they are not very fond of ethical calculators who put a price on human life. Ford learned that lesson long ago with the Pinto’s exploding gas tanks.

Not all the waters will be smooth for Alan Mulally in the days ahead. But it is entirely possible that Ford’s clearly stated values will help them solidify their gains and compete at a new level, particularly in the United States.

This is a lesson for all of us, and one I am taking to heart as I begin my Ethics class again in a few weeks. What I am interested in hearing from readers in the response area below is this: In 50 words or less, what values drive you?

Categories: Bottom Line Ethics

“There are two places where young people should be learning business right now: oil and gas, and real estate.”

These words from a close family friend and mentor in 1981 sent Thomas Saylak ’82 into the commercial real estate market, where he would spend the next 27 years of his professional life. Saylak went in as a college student with big dreams, and he returned to A&M as an investor with the means to make other students’ dreams a reality. And that’s exactly what he’s been doing.


“A&M attracts students that are well-known for character and work ethic,” said independent real estate investor Thomas Saylak ’82. “That’s our most valuable asset.” (view more photos)

When he left real estate in 2006, Saylak used his experience to found Teewinot Holdings, the private investment holding company for the Saylak family interests. During a recent visit to Mays, Saylak discussed his experiences.

Saylak served on the A&M presidential selection committee that chose the newly installed President Bowen Loftin. He also serves as the chairman of the Texas A&M University Foundation, where he works with other former students to help Texas A&M achieve Vision 2020. “It’s an important time to be involved in what’s going on in A&M,” he says. The foundation works to further the educational mission of A&M through major donor gifts, and it is Saylak’s ambition to make sure the vision is realized. Some question whether or not the precepts of Vision 2020, which include the goal of Texas A&M being ranked in the top 10 among public universities, conflict with A&M’s historical values and identity. Saylak strongly disagrees. “It is unquestionably possible to achieve Vision 2020 without impairing what makes A&M wonderful and unique.”

Saylak reminds students, current and former, that being a “good Aggie” includes supporting A&M financially. He encouraged his audience to begin a deliberate pattern of investing in A&M through gifts and service after graduation because their own degrees appreciate in value as the image of the university improves. Saylak maintains that a former student’s commitment to their university has a direct effect on their own marketability. Therefore, from an investor’s point of view, investing in Texas A&M today yields a big return for graduates when the rankings go up in the future.

In an economic climate where students are more than usually concerned about being able to find professional employment, how to stand out to potential employers is the big question. Saylak told students that from his viewpoint as a New Yorker well versed in business, an Aggie education is highly marketable. “A&M attracts students that are well-known for character and work ethic. This makes grads highly sought after. That’s our most valuable asset.” He also predicts that the job market will improve gradually but meaningfully by the end of this year; for those in IT, the market is already thriving once more, he notes.

When students asked Saylak about the value of graduate degrees versus job experience, he told them both are important. Saylak, who earned an MBA from Harvard, suggested they work for several years before pursuing a graduate degree, even though he concedes it’s easier to stay in school than it is to go back to school. “Your graduate education will be much more valuable if you have that work experience to draw from,” he says. “Also, an MBA program is a great opportunity to refocus your career by taking a course of study that positions you for a new professional trajectory.”

As the conversation shifted over to America’s precarious financial situation, Saylak offered this interesting insight: The biggest threat to U.S. security is that it owes money to countries with which it has strained relations; in some cases very strained. “If you owe money to someone, they own you,” he says. If something isn’t done about the U.S. debt quickly, Saylak warns, it could jeopardize our financial sovereignty. “A dollar owed to somebody isn’t liberal, and it isn’t conservative. It just needs to be paid back.”

Categories: Executive Speakers, Former Students

With New Year’s resolutions slipping further back into memory, the once-crowded gyms have returned to normal, and fresh foods have been replaced by frozen dinners once again. But before society slips into its cyclical complacency, it could receive some motivation to stick with those healthy-living resolutions from an unlikely source: corporate America.

Ramona Paetzold
Paetzold

An article from Workforce Management states that obese workers could soon be discriminated against due to a recent court ruling in Indiana. Under the court’s mandate, the restaurant chain Boston’s The Gourmet Pizza is responsible for covering the cost of weight loss surgery for a former cook, who hurt his back while on the job. The man’s weight made it impossible for physical therapy to be effective, and his doctor prescribed weight-loss surgery as his best option for a full recovery.

According to Ramona Paetzold, professor of management and Mays Research Fellow who was quoted in the article, there is very little to keep workers from being discriminated against on the basis of their weight. Obesity is rarely covered under the Americans with Disabilities Act (ADA), except in cases where genetics or specific illnesses are to blame. Paetzold speculated on the possibility of obesity becoming a part of the ADA, but contended that there were still several legalities to iron out before weight could be considered a legitimate disability. “We don’t know yet if [the changes to the ADA] will include people on the basis of weight,” Paetzold says. “If so, what will “obese’ be defined as, and will causes of obesity play a role?”

Workforce Management goes on to reason that, if a clause were to be added to the ADA concerning matters of weight, “It would likely be narrowly defined to exclude a condition that is the result of a person’s lifestyle.” In other words, a person whose weight is the pure product of overeating would not be considered a person with a disability. However, the lines blur after that because who’s to say that a person’s inclination to overindulge isn’t genetic? And with many obese people, their weight puts them at a significantly greater risk for developing illnesses like diabetes, which can be hereditary as well as the product of an unhealthy lifestyle. These are arguments that lawyers in situations like the Boston’s case might use to defend their obese clients, and then anyone with overweight relatives could contend that their condition is preexisting on the basis of heredity.

With a very slim possibility of a useful ADA addendum protecting employers from those workers who are obese because they’ve chosen to be, what options are employers left with? In the Indiana case, for a man of the plaintiff’s girth (380 pounds at the time of the ruling) a weight-loss procedure can cost upwards of $25,000, and many employers may be wondering if an employee is worth that investment. Boston’s The Gourmet Pizza is a fairly sizable chain, and having to pay that sum is probably not a hardship. But for small businesses, it could mean crossing the fine line between the black and the red. The risk of putting multiple people out of a job for the health of one employee is not a gamble that any company will take lightly. In fact, these are risks that employers will be inclined to weigh carefully when hiring an obese worker, and many may decide against hiring on the basis of the risk.

According to a February 2010 article on WebMD.com, the percentage of obese and overweight American adults in 2009 has risen to 63.1 percent. With more than half of the adult population fitting into this category, if employers began discriminating against obese workers it could put a significant portion of working America out of a job. Several businesses have already enacted policies against hiring smokers, whose lifestyle choices will almost certainly end up costing their respective companies thousands of dollars in health insurance payouts. What will protect obese workers from having similar policies enacted against them?

The article sites that “obese employees, like smokers, so far have had little success claiming they were discriminated against.” Corporations know from history that it only takes one high-profile win to set off a slew of court awards for workers who have been the victims of discrimination, and the Indiana case appears to be a serious step in that direction. For small businesses, the cost of hiring an obese worker could undeniably outweigh the benefits, and many will decide that refusing to hire an overweight employee is better than losing a court battle later.

Think you might be at risk? A person is considered obese when they are inactive and have a body mass index (BMI) over 30. You can calculate your BMI using WebMD’s BMI Calculator Plus.

Categories: Research Notes

Aggie parents Jeff and Shana Wood believe in the quality of education available at Mays Business School and believe in supporting its mission by providing financial gifts. They recently gave $25,000, which will be used to establish the Shana and Jeff Wood Scholarship in Business, one of several scholarships bearing their name at Mays.

“We love the school and what it stands for,” said Wood. “We think it’s important to be involved.” Wood says he hopes that his gift can make a positive impact on the world, as a deserving student will have access to a great education that might have previously been out of reach.

“Everyone we know from Texas A&M University is a great example of integrity and honesty. We love the product that we have seen come out of Texas A&M through the academics, emphasis on moral character, and strong principles.”
– Jeff Wood

Wood is president of Landmark Resources, Inc, an oil and gas exploration company in Houston, Texas. He and Shana, a homemaker, volunteer their time with Yellowstone Academy, a Christian elementary school that serves students in inner city Houston. Wood is also a deacon at Second Baptist Church, and he sits on the president’s cabinet at the College of Biblical Studies. He says he strongly believes in the promise that Aggie students display when they enter the business world. “Everyone we know from Texas A&M University is a great example of integrity and honesty. We love the product that we have seen come out of Texas A&M through the academics, emphasis on moral character, and strong principles.”

The Woods, who also support the 12th Man Foundation, often spend their weekends in Aggieland, especially during football season as their oldest son, Jeff ’09, works with the team. The Woods’ daughter, Elizabeth, also attends Texas A&M and is member of the class of 2011. The Woods’ youngest son recently graduated from high school.

Categories: Donors Corner

As consumers, we have it easy: corporations tell us to buy their new water bottles made with 60 percent less plastic and their chips with biodegradable bags, and all we have to do is hand over some cash to go green. But for corporations, going green means spending years researching, testing, and developing environmentally friendly products that won’t break the bank. So that fertilizable chips bag actually represents a years-long process of hard work that began with a team of innovators pitching their idea to a boardroom of executives.

The members of Team Red Cloud, (L to R) Blake Berend '03, Liz Mullane '11, Nicole Kresse '11 and Praveen Jain '11, at the 2010 Leeds Net Impact Case Competition in Boulder, Colo.
The members of Team Red Cloud, (L to R) Blake Berend ’03, Liz Mullane ’11, Nicole Kresse ’11 and Praveen Jain ’11, at the 2010 Leeds Net Impact Case Competition in Boulder, Colo.

A team of four Mays MBA students experienced this process firsthand when they competed in the Leeds Net Impact Case Competition, held at the Leeds School of Business at the University of Colorado at Boulder, February 19-21. The competition, hosted by Xcel Energy, focused on environmental sustainability. Teams spent the weekend pitching green ideas to a panel of judges who critiqued communication and reasoning skills. Though it was the first time they’d competed in Net Impact, the Mays team made it into the top five out of a field of 120 teams from across the United States.

In order to make it to Boulder, the team first analyzed a preliminary case and created an electronic presentation of their conclusions to submit to judges. The top 20 presentations were invited to the live competition. Blake Berend ’03 said when the team received their invitation, they began working to answer Xcel Energy’s case question: “How do we sustain profitability, when sustainability is becoming increasingly important?” In other words, create innovative ways to conserve natural resources while producing a competitive product.

From sales and marketing, to foreign utilities and the Peace Corps, the Mays team represented a wide variety of skill sets and experiences. Berend said they used their differences to give the team a creative edge. “We were working together very well, providing unique perspectives.”

In Boulder a week later, they presented live. The 20 teams competed in groups of four with the winner making the cut for the coveted top five positions and the final round. “Making it to the finals was exciting and surprising,” Berend says, especially since it was their first year to compete.

Xcel Energy hosted the final five and grilled top competitors in a Q&A about greenwashing ((Greenwashing or “green sheen” is commonly used to describe products that are not substantially better for the environment, but claim to be green to boost sales.)), how the teams arrived at their financials, and the assumptions used to construct sustainability plans. One of the most difficult parts of the competition was not knowing what the other teams were doing, mimicking the nature of business. “You never really know how you’re stacking up against the other teams, since you don’t get to see anyone else present,” Berend said. “Were we doing something similar? Were we out in left field?”

In the end, Team Red Cloud didn’t find their name in the top three. Still, they accomplished an extraordinary feat for first-time competitors. Though the competition included Notre Dame, Vanderbilt, and Baylor, Berend said the most disconcerting element was removing his Aggie Ring to keep to the competition’s code of anonymity. “It felt so weird not to have it on, and I kept forgetting and thinking I’d lost it when I didn’t see it,” he said.

Congratulations to all the members of Team Red Cloud:

  • Blake Berend ’03
  • Liz Mullane ’11
  • Nicole Kresse ’11
  • Praveen Jain ’11

Categories: Programs, Students

I don’t need to tell anybody reading this message that we are living in tough economic times. Many of you have asked how this is affecting Texas A&M University and Mays Business School. We are not immune to the current economic challenges and, like the entire A&M community, we have been asked to submit a formal plan that reduces our budget over the next two years.

We are already a lean and efficient operation, and making cuts is never easy or fun. Early in our planning process, we quickly determined that we must do all we can to continue investing in the outstanding members of the Mays family and adhere to the following principles to sustain our excellence:

  1. We will provide a high-quality learning experience for our students at a reasonable cost.
  2. We will attract and retain the very best faculty and provide them with the resources necessary to sustain and enhance their excellence.
  3. We will recognize and reward our staff for their outstanding work.

The recent rankings by the Financial Times of our MBA program (9th among U.S. public schools) and Accounting program (2nd among U.S. public schools) provide strong evidence of our existing excellence and emphasize the importance of continuing to enhance this excellence.

As we have considered various alternatives, one thing is clear: the important role that our friends and supporters play in the life of Mays. Your support helps us educate the next generation of business leaders and produce scholarship that impacts the academic and business worlds. Please accept my most sincere appreciation for the major role you have played and continue to play in our success.

Categories: Deanspeak

Overqualified and underpaid. Who would have thought that this could be the slogan of many of the employees at “the happiest place on earth”, where all your dreams come true? That’s the reality of a cast member at Walt Disney World.

I recently spent five months interning with Disney. I went in ready to challenge Bob Iger himself about who loved and knew more about the company. Along the way I learned the unique and challenging corporate culture of the infamous and renowned Walt Disney Company.

Mays Business Honors student Heather Henry '11 recently completed a five-month internship at Walt Disney World.
Mays Business Honors student Heather Henry ’11 recently completed a five-month internship at Walt Disney World.

My first weeks of training were a whirlwind: adjusting to living with five other girls from across the globe (literally—I had roommates from Japan and Korea), learning the Disney ways, and acclimating to the Florida weather.

I was excited to begin working and making the magic! Every Disney employee goes through an eight-hour training course learning a multitude of basic concepts including: There is only one Mickey, and he is real; the cord stretching out of Cinderella’s Castle is a cable line so Prince Charming can watch ESPN, not how Tinker Bell flies at night before the fireworks; and your sole purpose for living and breathing is ensuring that complete strangers have the best vacations ever.

My title was Magic Kingdom vacation planner. I thought, “This job is a dream come true! I never want to leave Disney as long as I live! I can go to the Magic Kingdom every day!”

The first day was an in-depth tour. From the secret tunnels and the ways to get on and off stage from behind rides were utterly amazing. I was then shuttled via monorail to the Ticket and Transportation Center (TTC). Away from the glamour of Main Street USA and Fantasy Land, I was surrounded by buses, shuttles, and concrete.

To my surprise, we went in one of the ticket booths. TICKET BOOTHS? At that point I started feeling deceived. This is “vacation planning”? What about resorts, character breakfasts, and guided tours?

I tried staying positive. That was easier after I talked to my roommates who didn’t fare much better on their first day in “quick service food and beverage,” “merchantainment,” and custodial. Custodial by far won the worst job contest.

It took four weeks of intense classroom training to learn the 92 different ticket packages available before returning to the TTC. I came to understand why we were considered vacation planners given the complexity of the packages, but the title was still an exaggeration.

On my first day of actually working in the booths, I was shocked to find so many college program participants like myself who had extended their program two or three times. They were taking online classes or dropping out of college altogether to stay and work for Disney doing the lowest level jobs. Some had graduated and come back to work seasonally, making minimum wage with no benefits, praying for enough hours to pay their rent. The other end of the spectrum included cast members with college degrees, who had worked for the company 20 or 30 years and were still in vacation planning. I was flabbergasted. What about corporate? Why were corporate and the theme park side so disconnected?


“Disney knows that if their cast members will do the humblest of jobs in the park, then they may be a good fit for an upper-level position.”

About halfway through my program I began the Disney Exploration Marketing Series. This program features classes taught by Disney executives. I met with people from Disney Cruise Lines, Disney Vacation Club, Global Disney, Disney Special Events, Disney’s Direct Marketing, etc. Every single person had been with the company for nearly 20 years or more and had started out like me, in the college program, in a crummy job making next to nothing. I was fascinated. Meeting the people responsible for the themes of Disney each year (“Year of a Million Dreams”, “Celebrate Today”, etc.), and learning about all aspects of marketing the park, I thought, “I want to do that!”

The next day I would go back to the ticket booth disheartened again.

One day, an executive in our classroom talked about his first job: ticket taker in Hollywood Studios. He detailed how awful it was and how discouraged he’d been. He then said something that changed my entire perspective. “Everyone wants to work for Disney and they will do anything to be a cast member. That is why 99 percent of Disney employees are overqualified and underpaid.”

That was it—my epiphany. There are very few opportunities at Disney to come in from the outside. As an intern, you start out feeling like gunk at the bottom of the barrel. You work your way up millimeter by millimeter until finally a door opens. A simple concept that was hard for me to grasp.

This is not new for most college grads. They go into the workforce, start at the bottom and work up. Disney takes this to an entirely different level. Disney knows that if their cast members will do the humblest of jobs in the park, then they may be a good fit for an upper-level position.

Working at Disney was some of the greatest experience I could have gotten: learning to deal with difficult guests, the urgency of helping lost children find their parents, the different cultures of guests and other cast members. I made friends from all over the globe and learned to be open-minded about other cultures. I have come back changed and with a less myopic view of the world.

Since returning to A&M, I’ve reflected on my experience. The “me, me, me!” perspective of guests has made me much more humble. It’s hard to step back and say, “I am really not that important,” and to get rid of the “I deserve better than this” mindset; but when you do, it changes your view of what matters. I am a better person for it even though it was one of the hardest things I’ve done. The lessons I learned and the friends I made changed my character and gave me a new perspective that made being overqualified and underpaid worthwhile. It’s almost magic.

Categories: Perspectives

Most Americans feel some level of negative emotion about federal income taxes: confusion and anxiety over the complicated filing process; fear about how much they still owe and how they’ll pay it; or frustration that taxes are so high compared to the value of the benefits they see. No matter how much one is expected to pay, complaining is a given.

“It doesn’t matter what the level of income. People always complain at tax time,” said Connie Weaver, associate professor of accounting and Mays Fellow.

All these emotions are part of the challenge of tax reform. Reasoning and rhetoric are drowned out by shouts of “taxes are too high!” versus tales of disadvantaged children losing access to food or health care due to budgetary cuts in the social services financed by taxation.

At a recent round table discussion, six members of the accounting faculty at Mays discussed the problems that face U.S. taxation, touching on the history of the system—recent and long past—and ways the system might be modified. It’s a timely topic, as the Bipartisan Tax Fairness and Simplification Act of 2010 Bill recently introduced in the Senate proposes simplification of the tax code. Some are forecasting that after health care, tax reform will be the next big debate on Capitol Hill.

Tea parties and taxation: a history lesson

One political party suggests less taxation leads to greater prosperity for all, while another party says the reverse, and yet another suggests that elimination of taxes is the best option. Should soaring deficits be tamed by raising taxes or cutting spending? Viewing the issue through the lens of American history is enlightening, says Thomas Omer, Ernst & Young Professor of Accounting, who notes that the first instance of income tax in the U.S. was a temporary measure to finance the Civil War. Prior to that, the federal government was funded by tariffs and excise taxes. There were no entitlement programs (unemployment, welfare, Medicare, etc.). State governments were powerful. Federal taxes provided primarily for the defense department.

ROUND TABLE PARTICIPANTS
Lasilla Dennis Lassila
Deborah D. Shelton
Professor in Taxation
Myers Adam Myers
Senior Lecturer
Clair Nixon
PWC Accounting Excellence Professor
Thomas C. Omer
Ernst & Young Professor of Accounting
Kevin Roach
Executive Professor
Connie Weaver
Associate Professor, Mays Fellow

Originally, “trade was the only way that they raised funds to run the government,” says Omer, who recommends the HBO miniseries John Adams for understanding the founding fathers’ ideas about taxation.

“Even under that temporary income tax and the constitutionally adopted income tax in 1913, relatively few individuals were subject to the tax,” interjected Adam Myers, senior lecturer. “The 1913 tax only applied to those with taxable income in excess of an amount equal to $63,000 in today’s dollars.”

Looking back at history isn’t helping members of the Tea Party Movement see more clearly says Omer, remarking that a recent poll shows many of them are confused about the state of taxation in the country: a mere two percent responding to the poll understood that taxes have decreased since Obama became president; the other 98 percent said taxes had risen or stayed the same, or that they didn’t know.

Moving beyond U.S. history, Omer comments that in Europe, taxes are much higher, but there are more direct benefits (universal health care chief among them) to taxpayers, resulting in less discontent about the tax burden.

Myers doesn’t think the U.S. is likely to adopt the European model. He believes that approach to government is incompatible with history and a widely held perception of American society. “Since Jamestown, America has existed for wealth-building fueled by entrepreneurial zeal. In the Declaration of Independence, the founding fathers did not declare we are entitled to happiness. They declared we are entitled to the pursuit of happiness. The key word is pursuit, not happiness,” said Myers. “I believe that’s what President Bush really meant when he talked about the “ownership society.'”

Omer says that in the U.S. we are in danger of pursuing happiness at the expense of social welfare and social consciousness. He sees that as part of the need for taxes—it keeps us as a society from imploding from the pursuit of happiness via private ambition. “That’s the reason why the government needs funding. To keep a moderate amount of civility in the world…you cannot control chaos without money.” There has to be a conscious effort on the part of the citizenry, who will put aside that pursuit in favor of maintaining society, he says.

“So philosophically, there’s a need for an income tax,” said Dennis Lassila, Deborah D. Shelton Professor in Taxation. “The second question is, does it have to be as complex as it is?…Could as much revenue be generated with a simpler system?”

Proposed Reform

Tax reform is a complicated issue. Even with endless debate by top economists, there is no clear solution, says Lassila. Whatever changes are proposed, it’s inevitable that the government will continue to tax individuals and businesses increasingly until federal deficits are under control. “The government is going to be searching for additional sources of revenue, simply because there’s a lack of political will to address the other side of the equation: government expenditures,” he says.

One alternative Lassila brought up was the value-added tax or the VAT. A VAT is similar to a sales tax. But rather than being tacked onto purchases, a certain amount of tax is assessed at each stage of production (i.e., as value is added) and is added directly to the price of the product. Eventually, 15 percent of the price paid by the ultimate consumer may be due to the VAT. This is a simpler system than adding various excise, local, and state taxes on good and services. Myers says, among other negative characteristics of a VAT, the system is easily corrupted. A recent study estimates VAT fraud in the European Union reduces annual revenues by up to 30 percent. The comparable estimated number in 2005 for the US income tax was 12 percent, he says.

Many of the United States’ trading partners have incorporated the VAT in the price of goods imported, and it’s a point of debate as to whether this puts the U.S. at a competitive advantage or disadvantage in trade, says Lassila.

Myers believes the simple solution is a flat tax for individuals and businesses. All businesses would be governed by one set of rules. Sole proprietors, partnerships, and corporations would not be governed by differing sets of tax rules. A flat tax would eliminate complexity by reducing the number of pages of a return to a single page. Most proposals set a single flat rate of less than 20 percent, and include a generous exemption based on family size, eliminate deductions, exemptions, and loopholes.

Weaver disagrees, saying the flat tax idea, while it’s been bandied about for ages, is no simpler than the progressive income tax system we have now. “The calculation of the rate multiplied by income isn’t the hard part, so a flat tax doesn’t really do anything [different].” It’s still going to be subject to all of the same political considerations as the current system, she says.

Clair Nixon, PwC Accounting Excellence Professor, sided with Weaver: “I don’t think we will ever see a flat tax system in the U.S. There will always be a motivation to tax higher income individuals at a higher rate. It is perceived as a matter of ability to pay, not fairness.”
Myers pointed out countries in Eastern Europe and the former Soviet Union, including Russia, have enacted flat taxes since 1994 and are succeeding. Consider the Baltic states, he suggests, where the flat tax rates are less than 25 percent and economies are growing. “This is not such a wild idea,” he says.

Overhaul of current system

Lassila says that in the last 35 years since he’s been in the accounting field, the system has grown alarmingly complex. His proof? When he started out in the field, there was one volume of the Internal Revenue Code and three volumes of income tax regulations. Now there are two volumes as large as the first of Internal Revenue Codes, and six volumes of income tax regulations. All these changes over the years lead to confusion, leading to problems with compliance.

Omer suggests one easy way to simplify the tax code is to take out all of the special clauses that have accumulated over the years that at one time served a purpose, but are now merely annoying loopholes that may be of benefit to some businesses or individuals, but not the overall economy. “Part of this accumulation of code is merely inertia,” he says. “If we could get rid of the junk, it would be far less complex.”

Myers contributes that if he had his say in tax reform, he would remove double taxation. For example, estate taxes: the money is taxed when it is earned, and taxed again when it is passed on to heirs.

Myers also believes the development of tax software emboldened Congress to pass more complicated tax laws. “It’s ridiculous most of us have to use a computer to file our tax returns,” says Myers, pointing to complex tasks such as determining who is a dependant. In many working-class families, nontraditional family living situations exist, with children frequently being raised by someone other than both biological parents. Regular people who are making a wage shouldn’t need to use a computer or a tax preparer, Myers contends.

Kevin Roach, executive professor of accounting, agrees, saying many low-income people are unaware of the benefits built into the federal income tax system for them, such as credits that would provide a refund, even if they are not required to file because they are under the income requirements.

This is a topic that is important to Myers, who teaches the class “Special Topics in Tax—Federal Taxation of Low Income Filers: Socio-Economic Forces” at Mays, which focuses on federal income tax legislation, its impact on low-income filers, and the socio-economic forces impacting low-income families and individuals. Each student in the class must volunteer to provide free income tax return preparation for low-income individuals and families.

Nixon says while some considerations must be made for this population, “For the majority of Americans, filing a tax return is fairly easy and relatively inexpensive. In many cases, the tax return can be filed for $50 by a paid preparer. If you are a wage earner who does not itemize deductions, the forms are easy to follow and there is an incredible amount of free assistance out there. In fact, less than half of Americans itemize their deductions. The complexity arises for the moderate to high income individuals who have home mortgages, investments, and self-employed activities.”

“Although we talk a lot about the burden of the income tax, in reality, for low income individual, the employment tax (FICA) is much more burdensome,” says Nixon. In fact, a third of Americans pay more in FICA withholdings than they do in income taxes.

In the end, there are conflicting interests on the part of the politicians, both red and blue, and conflicting interests among their constituents based on varying socio-economic situations and philosophy. If we could resolve those differences and arrive at consensus about what needs to be done, then much could be accomplished, says Myers.

Resources

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