NASA and Georgetown University’s McDonough School of Business invite the public to a discussion with the most recent space shuttle crew to fly in space at 6:30 p.m. on Monday, July 26. The McDonough School of Business will host the six astronauts in the Lohrfink Auditorium of the Rafik B. Hariri Building. The crew members will give a video presentation about their mission and answer questions from the audience.

Date:
Monday, July 26, 2010
6:30 p.m.

Location:
Georgetown University
McDonough School of Business

Equity Panel

The program is sponsored by the Georgetown University McDonough School of Business Center for Financial Institutions, Policy, and Governance, under the direction of Phillip Swagel, visiting professor and former assistant secretary of the U.S. Treasury.

Stefan Jacoby is the president and CEO of Volkswagen of America, Inc., taking responsibility for the Group’s automobile business in the United States.

He began his career in 1985 in the Industrial Sales Controlling Department at Volkswagen. In March 1988, he moved to the Controlling and Marketing Departments of Volkswagen of America for a year, and subsequently became responsible for pricing in the Commercial Vehicles business line.

In April 1990, Jacoby became head of controlling at Volkswagen Audi Nippon KK, Japan, helping to set up the new sales company. Following his return to Germany at the end of 1992, he assumed responsibility for Volkswagen AG exports and the control of Volkswagen sales companies in the Sales Planning Department.

From January 1995 to September 1997, he managed the General Office of the Chairman of the Board of Management of Volkswagen AG. As a member of the top management, he was responsible for the Asia-Pacific Region from October 1997 to September 2001, and was instrumental in bringing about the further expansion of the two Volkswagen joint ventures in China.

During the period October 2001 to February 2004, Jacoby was president and CEO of Mitsubishi Motors Europe B.V. headquartered in Amsterdam.
He subsequently returned to Volkswagen AG in Wolfsburg in March 2004, initially assuming responsibility for the Group Sales Strategy Department. He was appointed General Representative of Volkswagen AG for the Marketing and Sales Department in mid-2004.

Jacoby earned a master’s degree in business administration from the University of Cologne.

Dr. A.P.J. Abdul Kalam, former president of India, shared his insights on “Life, Progress, Challenges, and Growth” during a Distinguished Leaders Series discussion at Georgetown University’s McDonough School of Business.

The Distinguished Leaders Series annually brings to Georgetown’s McDonough School of Business accomplished leaders who share their unique experiences with the school’s undergraduate and graduate students.

When it comes to product features – when more means better in the eyes of buyers – how much is too much?

Debora Thompson’s consumer behavior research began with a casual question: Should something as simple as a mouse pad need an instruction manual?

In 2005, when Thompson was a doctoral student at the University of Maryland, someone gave the mouse pad in question as a gift to her adviser and professor, Roland Rust. This was no ordinary mouse pad, though; it also included a calculator and other electronic features.

Rust could not make it work.

Joking about this confounding, unnecessary device turned into a discussion of other hard-to-use, feature-filled items.

“Here you have this super-smart person, a world-renowned scholar, and he cannot use his washing machine,” says Thompson, now an assistant professor at Georgetown University’s McDonough School of Business. “So we started talking about this and wondering, is this just our own anecdotal evidence, or is this a general tendency that consumers are overwhelmed with a lot of the products they buy?”

Thus began their research on what they would come to call “feature fatigue.”

A modern consumer would be hard-pressed to find a plain cell phone; most also are audio players/cameras/mini- computers/gaming platforms. Manufacturers are locked in an apparent arms race to see who can put more bullet points on their boxes. “More” often seems synonymous with “better.”

With that in mind, Thompson and her colleagues set out to discover just how much is enough.The answers have practical implications for manufacturers, marketers, and consumers alike.

Now With 75 Percent
More Bells and Whistles!
Evidence of feature fatigue — or feature creep, a similar concept — is abundant. It shows up in consumer blogs where authors rant about the complexity of a new appliance. It appears in online reviews written in colorful language by unsatisfied customers.

Nearly everyone has a tale of a frustrating product they simply could not figure out. Thompson mentions a friend’s father who went so far as to place tape over the extraneous buttons on his remote control so he would not press them by mistake.

Anecdotes are helpful, but given her background in social psychology, Thompson wanted data to explain the disconnect between what consumers want when they shop and what they get when they open the box and start using a product.

“People are complaining about complex products,” Thompson says, “but they bought them in the first place. We are trying to understand this paradox.”

In research first published in 2005 in the Journal of Marketing Research, then further highlighted in Harvard Business Review, Thompson, Rust, and Rebecca Hamilton (now an associate professor at the University of Maryland) designed a set of experiments comparing perceptions of a product’s capability with its actual usability.

In one experiment, the researchers simulated an in-store experience by presenting study participants with interfaces for digital audio and video players that had either seven, 14, or 21 features.They asked participants to rate each model’s perceived capability and usability. Although participants were aware that feature overload might decrease a player’s ease of use, 62 percent still chose the most feature-rich options.

A second experiment backed up those results by instructing participants to customize their own product by choosing from a list of 25 features. Again, these would-be consumers stuck with a “more is better” mentality; they chose an average of 19.6 features for their customized players.

A third experiment tested how much hands-on use changed consumers’ choices. Study participants were split into two groups. A “before use” group could pick between two virtual products, one with seven features and one with 21, but they could not actually try these products. An “after use” group chose between the same products after testing them.

Hands-on experience played a crucial role: 66 percent of the “before use” group chose the option with 21 features, compared with just 44 percent of the “after use” group.

These results create a conundrum for marketers and manufacturers. Past consumer behavior research has shown that if companies add features to a product — even trivial, unnecessary features — consumers are likely to view that product as newer or more desirable than other models. Because of that, Thompson says, “Marketers and engineers really have this ‘Why not?’ mindset. Adding features is an easy and often inexpensive way to create differentiation.”

On the flipside, usability research has shown that performing simple functions becomes more difficult for users as features are added to a product. Poor usability creates frustrated consumers, and frustrated consumers are less likely to buy a company’s products in the future — and more likely to spread negative word of mouth.

On the surface, “less is better” might seem like the ultimate message, but the message is not that simple. Some companies, including electronics maker Philips and camera maker Flip Video, have had success marketing the simplicity and ease of use of their products, but that approach will not work for everyone.

“Simplicity and usability can be effec- tive points of differentiation,” Thompson says, “but it’s more difficult. It’s certainly easier to add more stuff and say, ‘We have more.’”

Often, if a company moves entirely toward feature-poor products, they will lose sales to their feature-touting competitors, regardless of relative quality, Thompson says. Managers need to assess the proper number of features that will be both attractive and functional for consumers on a product-by-product basis. Thompson and her colleagues provide a mathematical model in their research for balancing feature optimization with cus- tomer satisfaction.

“Our argument was not that features are necessarily bad,” Thompson says, “but that companies need to calibrate, to find the optimal level of features, one that doesn’t hurt your usability and still makes you attractive to consumers in the beginning.”

Limited Trial Offer — Act Now!
With that initial research as a foundation, Thompson and Hamilton dove deeper into the consumer’s mindset in their next paper, “Is There a Substitute for Direct Experience?,” published in December 2007 in the Journal of Consumer Research.

This research deals with two very different types of consumer experience: direct and indirect. Direct experience comes in the form of a product trial or any other practical, hands-on time with a product. Indirect experience could mean reading a simple description of the product or product reviews, for example.

Thompson’s basic theory, rooted in a concept called construal level theory, is that the further away from direct experience a consumer sits, the more likely he or she is to think about a product in abstract terms rather than concrete, practical terms. Abstract thinking leads people to pay more attention to desirability (comparable to capability) than feasibility (comparable to usability).

The researchers tested this theory in another set of experiments. The results, simplified:

• One group of participants had a direct experience with a product, but when tested two weeks later, they reverted to an abstract mindset and trended toward desirability over feasibility.
• In another study, participants exposed to communications encouraging them to think concretely — to imagine using a product in practical terms — were more drawn to feasibility than desirability. In this case, encouragement to think in concrete terms served as a substitute for direct experience.
• When asked to shop for someone else instead of themselves, participants were much more likely to think abstractly and favor desirability over feasibility.

“The bottom line is that the higher the direct experiential contact, the more effective you are going to be at shifting consumers’ mindset from abstract to concrete,” Thompson says. Likewise, the further away from direct experience a buyer gets — in time, proximity, or any other form of psychological distance — the more they return to abstract thinking.

The paper points to several companies that have successfully integrated direct experience into their sales and marketing. Maytag, for example, has allowed customers to test washing machines by bringing their dirty laundry to the store. Outdoor retailer REI encourages people shopping for a tent to try setting it up in the store (or the parking lot, depending on space). The simpler the tent is to use, the more likely the customer will buy it. Bullet points on a box are mostly moot in the face of direct experience.

“If we try to mimic or approximate this concrete mindset that consumers have after purchase, we can improve the quality of their decisions,” Thompson says.

As such, the best option for companies to create satisfied customers often is a product trial. However, product trials are not always practical or even possible. Consider online shopping, for example. Online shoppers cannot physically touch or use a product, so companies might try to provide as concrete a mental picture as possible by encouraging people to think about how they would use a product once it arrives. Thompson mentions a successful Web campaign by Kodak in which consumers could rotate digital images of the company’s cameras on screen and simulate using their buttons with mouse clicks.

Such an approach will not appeal to all companies, though. Some companies, particularly those with products that have long intervals between purchases, may be more concerned with the initial sale than with creating customer loyalty for future purchases, because customers are unlikely to come back for a repeat purchase anytime soon.

“The less important repurchase is, usually the higher the optimal number of features will be,” Thompson says. For some companies, appealing to the abstract mindset by offering feature-rich products remains the best plan for maximizing profits.

Be the First on Your Block to Own One!
Sometimes consumers also reap a different kind of reward from feature-rich products: the adulation of their peers. Think of the release of Apple’s iPhone, for example, when lines stretched around blocks; in certain circles, people who braved those lines to get an iPhone became the envy of their friends.

In a current working paper with colleague Michael Norton from Harvard Business School, Thompson explores “The Social Utility of Feature Creep.” This topic arose when Norton challenged Thompson with a provocative thought: Maybe people purchase feature-rich products because of their social value.This thought has roots in the long-established concept of conspicuous consumption.

Thompson and Norton tested how people make purchase decisions in a variety of circumstances. Study participants were asked to evaluate real mp3 players (direct experience) with a varied number  of features. In one case, they were told their survey answers would be confidential; in another, they were told their choices would be revealed to others.

In the confidential case, more users chose the mp3 player with fewer features; they cited its ease of use as the deciding factor. However, when those same participants thought other people would be evaluating them, they chose the more feature-rich players.

“What is interesting is it reveals that people are willing to make a trade-off — the potential disutility of a complex product for the social benefits that features can bring,”Thompson says.

Additionally, in another experiment, participants observed others as they made their purchase choices. The observers rated those who chose feature-rich players more highly in categories such as wealth, tech savvy, and openness to new experiences.

“We have found that observers systematically evaluate users of feature-rich products more positively than users of feature-poor products,”Thompson says.

“Wealth was expected [as a category]. We’re not surprised by that, but these results go beyond wealth inferences. They communicate something more nuanced about your personality.”

The lessons for marketers shine through in these results. If you want to sell a feature- rich product, your message should high- light public use or public display of that product. Create advertisements that show people using a cell phone/music player/ camera out in the world, for example. If you want to sell a feature-poor product, shy away from social messages that imply public use.

No single approach will work for any given company, which is why Thompson stresses the need for calibration. Finding the ideal through careful analysis comes across as a clear message in all of her research, whether the issue is balancing consumer perceptions with practical usability, juggling the realities of marketing and sales with the desire for informed consumer decisions, or deciding just how much “more” is right for your product.

“This varies a lot from product category to product category,” Thompson says. “You have to find the happy medium.”

You also have to ask if maybe, sometimes, a mouse pad should just be a mouse pad.

When World Bank Managing Director Juan Jose Daboub spoke at Georgetown University’s McDonough School of Business earlier this year about Latin America’s future prospects, he outlined a long list of daunting challenges, including a growing gang presence in some countries and diminishing tax bases in others, as well as civil unrest and unacceptably high poverty throughout the region.

Daboub also left students with encouraging, practical advice about how they could help. “Grassroots support,” he said, “is very important.”

The message resonated with the audience, which included several young Latin American students who had recently arrived at the school for intensive study in the Global Competitiveness Leadership Program. Hailing from Brazil, Peru, Chile, and other Latin American countries, many of these young leaders had already worked in grassroots organizations aimed at improving political, educational, or other social systems in their countries. They understood they could be far more effective if they collaborated with other countries in the region.

“The concept of global competitiveness is a real challenge,” Emygdio Carvalho of Brazil explains. “Years ago, we thought in terms of winners and losers. But we need to think about how we can compete to better serve the people and the planet.”

Judging success by the number of people who benefit is a popular idea among the new generation of leaders studying at Georgetown. The students say it applies both to their own countries and the region as a whole. Many identify a persistent gap between the haves and the have-nots in their home countries and say this inequality has held Latin America back in terms of economic health and competitiveness.

It may sound simplistic to discuss a region as vast and diverse as Latin America in such terms. But Ricardo Ernst, deputy dean of Georgetown’s McDonough School of Business and coordinator of the Global Competitiveness Leadership Program, argues that political unrest, a lack of accountability, inefficient government, and a regionally focused view of the world are common themes that have made it difficult for the area to compete in a global economy. “Latin America is falling way behind,” he says. In an effort to foster a regional network addressing these long-standing challenges, the Georgetown University Latin American Board launched the Global Competitiveness Leadership Program in 2007 for some of the most promising young leaders from Latin America, as well as Spain and Portugal.

Each winter, about 30 of these young leaders spend 12 weeks at Georgetown, where they collaborate on solutions to challenges in their own countries while pursuing a program of academic courses and field trips tailor-made to address the challenges Latin America faces today. Visits to Congress, foreign embassies, influential think tanks, and many of the other political and thought centers of Washington, D.C., are designed to give students a broader perspective on effective leadership. At the same time, the bonds they form with young leaders from neighboring countries help them adopt a more integrated view of the region and consider strategies that could put it on a more competitive path.

Think Regionally, Act Locally
For Jose Miguel Ossa of Santiago, Chile, the leadership program in 2009 was an appropriate next step in a short career that had taken him from a master’s program in economics to a job in an investment bank, and then through a period of soul-searching that led him to work on education policy in local government. Eventually, Ossa launched the nongovernmental organization (NGO) Crea Mas (Create More) in Chile to build a volunteer network supporting teachers and parents in educating their children.

Ossa had ideas about how to resolve the shortcomings of Chile’s educational system, which he tried to address through Crea Mas. Recognizing that overworked teachers had little time to prepare lessons, he designed a system of “unpack and implement” lesson plans that let teachers make the most of their time in the classroom and parents easily follow along at home.

Before attending Georgetown’s McDonough School of Business, Ossa had built Crea Mas into a network of 250 volunteers who interacted with about 2,000 students, providing tutoring and organizing extracurricular activities. He says the 12 weeks he spent at Georgetown helped convince him that expansion across borders was possible. Working with two classmates from the leadership program, he has helped expand the NGO into Brazil and Peru.

“It’s not easy to do in another country something you are currently doing in yours,” Ossa says. “But with Roberta [Machado, from Brazil] and Luis Miguel [Starke, from Peru], this has been so easy. We understand one another and most of all, we trust in one another.” Together, the three have organized an additional 50 volunteers throughout Chile, Peru, and Brazil. “We hope we are going to change the lives of thousands and then millions of people, letting them develop according to their will and not their reality.”

From Ossa’s perspective, education is at the core of so many of the region’s struggles, particularly as the world’s more developed countries start producing more high-quality, complex products. He also believes a grassroots volunteer effort can have a big impact. “There is a noticeable inequality in Latin American societies between socioeconomic levels,” he says, adding that his time at Georgetown’s McDonough School of Business helped him understand this vast inequality as a broad regional problem.

“We cannot be a strong country if we don’t act as a region,” explains current program participant Tamara Lopez, echoing this common sentiment. Lopez had been working on a political campaign in her native Chile when she learned of the McDonough School of Business program and was invited to apply. Although Chile is one of the wealthier countries in Latin America, Lopez says she is nonetheless dismayed by the great disparities between rich and poor.

Lopez expresses a strong interest in improving individual lives, and her coursework at Georgetown focuses on practical solutions that will advance the region’s global competitiveness even as they address individual poverty. The syllabus for the Global Competitiveness Leadership Program reads a lot like that of an MBA program, with courses including Globalization and Challenges for Emerging Economies, International Marketing Management, and Corporate Social Responsibility. However, as other class titles, such as Corruption in Developing Countries, indicate, the program was designed with the challenges of Latin America in mind. Georgetown McDonough School of Business Professor Paul Almeida teaches the group a class on global strategy, where he says he tries to emphasize acting strategically to make whatever is happening in the world work for an individual country or region. Rather than seeing China’s success as Brazil’s loss, for example, it is possible to see other countries’ successes as potentially helpful because they expand major world markets. “We shouldn’t view everything as a zero-sum game,” he explains.

Coursework also includes a strong focus on developing personal, business, and political leadership skills to prepare stu- dents to create and lead initiatives that will overcome long-standing economic barriers and promote democratic rule of law, civic responsibility, and global competitiveness.

“The philosophical approach behind the program is that globalization is here to stay,” Ana Collado hopes to establish a network for young professors in Latin America and Spain.

Georgetown will give their work a “multiplying effect,” as it clearly did for Ossa.

Highly Motivated Individuals
Students who participate in the Global Competitiveness Leadership Program each year are highly motivated. “They are not just eager; they are thoughtful, well-informed, and intellectually astute,” observes Almeida. “This idea that they are going to be leaders — I think they totally embrace it.”

Other members of the 2010 program include Ana Collado of Spain, an attorney who is pursuing a Ph.D. in economics while working for the FAES Foundation for Analysis and Social Studies, a prominent Spanish think tank. Collado hopes to establish a net- work for young professors in Latin America and Spain.

Fellow 2010 participant Carvalho is a political consultant who led a massive social networking movement, Oasis Santa Catarina, which organized a rapid response to what he describes as “Brazil’s version of Hurricane Katrina.” When extreme flooding in 2008 killed more than 100 residents and forced tens of thousands from their homes, Oasis Santa Catarina organized 30,000 workers to help rebuild 12 communities in a matter of days, Carvalho says.

How do you top that? As Carvalho sees it, the humanitarian effort that brought desperately needed relief to a community in crisis is the same sort of focused energy that will ultimately help make Latin America competitive with world economies.

“Brazil today is doing great in so many ways. We are raising almost every social and economic indicator. But we have a huge dis- connect between today’s politics and what we are really capable of doing,” he says, citing the widespread poverty that persists even as official economic indicators improve. When Carvalho returns to Brazil, he hopes to work on a project that will broaden the level of political participation. As he sees it, the more people are engaged in the govern- ment, the more they understand how it can affect their own lives.

These commonly cited aspirations to build consensus and establish political sys- tems where all people have a voice fit well within the structure of the Global Competi- tiveness Leadership Program. Outside the classroom, students share meals and hous- ing and spend an intense 12 weeks living and breathing the problems of and potential solutions for Latin America.

explains Ernst. “We want to move beyond saying that globalization is good, or that it is bad.That is completely irrelevant.”
The Global Competitiveness Leadership Program was designed to do more than pay lip service to the needs of the region. It has the ambitious goal of training lead- ers who will understand the political chal- lenges that have long stood in the way of economic growth and be able to deliver the tough medicine needed.
Program participants are between 24 and 32 years old, have a college degree, and speak fluent English. They have dem- onstrated strong abilities as leaders as well
as network builders, because a major goal of the program is to train leaders who can effect change throughout the region.
Students receive a $25,000 scholarship, which covers tuition, room and board, and incidentals, including travel. But when planning their trip, participants must book a round-trip ticket home; the scholarship requires that students agree to go back to their country for at least two years to work on a social, political, or entrepreneurial proj- ect that will boost the region’s competitive- ness. Sometimes, students have conceived of these projects before they arrive on cam- pus. Ernst hopes the network they build at “The lessons were just for our group,” Ossa recalls of the tailor-made syllabus. Although he was initially concerned that such a structure would limit the connec- tions he made on campus, he says he “real- ized it would be better that way. We would be focused just on our group, and the rela- tionships we formed would be forever.”
Clearly, such an ambitious program will face its own learning curve as it develops the best practices for training leaders to elevate Latin America on the world economic scale. One    challenge    is    participation. Although    stu- dents from 13 countries — including Argen- tina, Colombia, Peru, and Bolivia — have already participated in the program, other countries such as Paraguay and Uruguay have not yet been represented. To date, Nicaragua is the only Central American participant. Recruiting is done largely by Georgetown’s Latin American Board members, who reach out to their networks in the region and tend to be more established in more economically developed countries. Ernst says he hopes to broaden recruitment while expanding the program to include Guatemala.
Another challenge students face is identi- fying    the    best    solutions. While    all    participants
share a strong ambition to build projects that have a broad impact, some confess to being daunted by the magnitude of the problems facing Latin America, sometimes even more so after they dive into their intensive studies.
“It’s helping me to change my way of thinking about everything,” says Lopez. Although she came to Georgetown’s McDonough School of Business with a sense of a project she’d design to take back to Chile, after just a few weeks into the pro- gram, Lopez said, she was forced to think in broader terms and was reconsidering the direction of her work.
Many graduates return to the work they were doing before their studies at George- town, but they bring to it a new and much broader perspective of what they might accomplish. Madelene Lopez Ford attended the Global Competitiveness Leadership Pro- gram in 2009 and then returned to her for- mer job as exhibitions and events director for the Chamber of Commerce of Panama. But she also worked with four other students from the program to launch a sort of alumni association — the Iberoamerican Competi- tiveness Leadership Association (iClass) — to ensure that the bonds created at Georgetown
aresustainedandnourishedlongafter.About 40 program graduates traveled to Panama last November for the first iClass annual meeting, where they discussed topics ranging from education to infrastructure.
Lopez and her colleagues agree on the power of individuals and countries to work together in an interconnected system for the greater good. She points to the earthquake that struck her home country of Chile on Feb. 27, and the responses that came after, as an example.
“Today, I see my country in ruins, still in fear that I felt that dreadful day when I almost lost my family, and I feel great sad- ness,” Lopez said not long after the earth- quake. “But I also feel a lot of hope because of what I see through instances like this program — it raises a generation of solidar- ity, generosity, and understanding that the differences do not separate us, but enrich us. And we can build bridges, to reach out in difficult times.”

Andrea Orr is an author, blogger, and freelance writer who frequently reports on high-tech startups. She is based in Washington, D.C.

In MBA programs, there are career switchers and there are career enhancers. Sandeep Shamasunder (MBA ’11) is a switcher. After working at IBM Global Business Services for five years, he arrived at Georgetown University’s McDonough School of Business last fall eager to reorient his work around economic development in Africa and Asia.

One of the first lessons Shamasunder learned is that today’s international development is about more than seeking government handouts or foundation funding. “I was a little surprised by the increased business focus,” he says. “It’s not just about helping people; it’s about creating a public private model and a sustainable situation where, eventually, no outside money will be required.”

Shamasunder says he has been excited to learn about these new economic models, such as Coca-Cola Enterprises’ clean water initiatives in Africa, which has long term benefits for the water-dependent bottling business as well as the environment. “I thought international development would be more like the Peace Corps,” he says, “but I can see this approach is much
more successful.”

Not so long ago, social enterprise was relatively unheard of in corporate America or in business school. The two were as different as Birkenstocks and wingtips, and if they mingled at all, it was perhaps a goodwill gesture from the corporate side with a few zeroes at the end. But today, the two cultures are coming together in a union that has proved advantageous for both.

Social enterprise — which encompasses social entrepreneurship, international development, and corporate social responsibility (CSR) — uses traditional business tools to solve social problems and promote change. It can take many forms, from reducing industrial waste to decreasing sodium intake to promoting urban agriculture. Although doing good in order to do well is not a new concept, recent trends show a deliberate focus on creating social value across corporate, government, and nonprofit sectors. Idea sharing and innovation among the sectors creates better-run nonprofits and more socially responsible
corporations.

Georgetown’s McDonough School of Business — with its proximity to federal agencies, lobbyists, nonprofits, and an increasing number of corporate headquarters; its Jesuit heritage and tradition of service; and its status among the country’s to microfinance. “Ninety percent of students who come out of Georgetown’s McDonough School of Business will go into business,” says Distinguished Professor of the Practice Bill Novelli, who co-founded public relations agency Porter Novelli and served as CEO of AARP. “They’ll be a CFO, CEO, COO — not necessarily directors of corporate responsibility. But the important thing is that they care about social value and make responsible management decisions that benefit their companies and society as a whole.”

Novelli, who joined the faculty full time in August, also has been president of the Campaign for Tobacco-Free Kids, where he helped change public policies and limit tobacco companies’ marketing to children,
and executive vice president of CARE, the world’s largest private relief and development organization.

Students have always tended toward altruism and idealism, he says, but their commitment to making change has increased tremendously in the past decade. One example at Georgetown is Net Impact, a national organization of graduate students and alumni that focuses on using business skills to improve society. The Georgetown chapter, a charter member in 1993, is now one of the largest in the country and one of the largest student groups on campus.

“I think my generation as a whole is more aware of these issues because we’ve grown up with them,” says Net Impact chapter leader Katie Heffner (MBA ’11). The organization, which has 140 members, offers pro bono consulting to local nonprofits and has a board fellows program in which students act as nonvoting members of local nonprofit boards. Heffner serves as a fellow on the board of Kid Power, which works with underserved youth in Washington. Among her projects, she is writing the business plan for Veggie Time, a Kid Power program in which children grow their own vegetables, learn about nutrition, test recipes, and sell part of their harvest to local businesses.

Annual events include Net Impact Day, which features speakers and panels, and Net Impact Trek, during which students visit local companies that are active in social change.The organization also co-sponsored a Hoops for Haiti basketball tournament among MBA students in January.The event was planned in less than a week and raised more than $1,000.

Hilltop Consultants, the undergraduate counterpart to Net Impact, also provides consulting services to nonprofits. Every February, Hilltop hosts the Business Strategy Challenge, an intercollegiate undergraduate case competition founded at Georgetown. It is the only such competition with a nonprofit focus that deals with a current issue for the organization.Teams from across the country receive written cases and have 36 hours to prepare their solutions. Past clients have included the United Way Worldwide, the Academy for Learning Through the Arts (a charter school), and Keys, Inc., a liaison between hotels and homeless shelters.

Hilltop also has a couple mandatory hands-on events per semester. In the fall, members prepared food at D.C. Central Kitchen and assembled holiday literacy kits at early-childhood education nonprofit Jumpstart. “We already do the high-level, intellectual consulting work, so our members enjoy the hands-on work and enjoy seeing our impact,” says Hilltop President Renee Goldman (BSBA ’10), who founded her own nonprofit while she was in high school to promote music education in public schools.

Such hands-on service extends to other programs, as well. The Nonprofit Internship Fund provides financial support to MBA students who take unpaid or low paying internships between their first and second years. One student worked last summer at the Smithsonian Institution, where he surveyed employees at all Smithsonian museums about ways to raise money without charging admission. He analyzed the feedback, calculated the estimated financial return for various options, and created a presentation to the board of regents. In the end, one of his original suggestions was implemented.

Shamasunder, vice president of outreach for the fund, says there are typically 10 scholarships awarded, but last year the number rose to 17. It was the first time the money raised ($55,000, including a grant from the school) could not cover all the students drawn to these socially minded internships, he says.

Service-minded students also participated in the new MBA Service Day. In fall 2009, 250 first-year students spent a day of their orientation volunteering at five sites, including the Duke Ellington School of the Arts, Operation USO, and Rock Creek Park. Another new program, Community Fellows, recognizes graduating MBA students who have dedicated 100 or more hours to community service between orientation and April 1 of their second year. Thirteen 2009 graduates were recognized at graduation last year, and that number is expected to rise for 2010 based on hours already logged.

Business Skills for Social Ills
Alan Andreasen arrived at Georgetown’s McDonough School of Business in 1992, back when he was one of the few experts talking about social enterprise. The professor launched a social marketing class in 2003 and struggled to fill it with MBAs, finally getting about 20 students.

“Now I have 48,” says Andreasen, who has worked with the World Bank, USAID, the American Red Cross, and Habitat for Humanity International. “That’s really an indicator of interest.” He says students today, especially MBAs, are cognizant of an employer’s work ethic and social responsibility. “There’s a movement in this direction of wanting to work at a corporation that does more than make an awful lot of money for stockholders.”

Before coming to Georgetown, Heffner worked for The Cadmus Group, a company that consults with the Environmental Protection Agency. She worked on an asthma and secondhand smoke campaign and learned about the Energy Star environmental program. After that experience, she was drawn to the Georgetown McDonough School of Business’ focus on social responsibility. She says other schools offer social marketing through their public health programs, but she liked the idea of studying it in the context of business school. She is taking Andreasen’s social marketing course this spring.

“We talk about how you really can influence behavior change,” Heffner says. “What’s fascinating is that there’s no value proposition in it, and you have to create one.” She uses recycling as an example to which people can relate. “You’re not going to get any money for it. You don’t have anyone in your kitchen giving you a pat on the back when you recycle, so it’s creating this internal feeling: ‘I did a good thing.’” Whether it targets recycling, smoking, obesity, littering, or public transportation, social marketing uses conventional marketing tools to promote behavioral change, but Heffner knows it often takes a long time for people to embrace a new mindset.

Heffner has learned that when a company is doing good these days, it is a good business decision. Although some previous social acts might have been motivated by public relations, today companies see a clear connection between the bottom line and sustainability. Wal-Mart, for instance, has switched to energy-efficient lighting and more sustainable packaging. Both are good for the environment, but both also save the company millions each year. As Novelli wrote in a column in the fall 2009 issue of Georgetown Business, “It is not so much about doing good beyond the bottom line, but as part of the bottom line.”

“When you’re dealing with a business school audience, it doesn’t come from a nai?ve place,” says Leslie Payne (MBA ’06), who works for Arabella Advisors, a firm that helps families, individuals, institutions, and corporations evaluate social impact and develop effective philanthropic strategies. “Especially with issues like the climate, there’s a huge business opportunity there, and there’s going to be a huge market for solving it. Earlier, we were relegated to charity or dogooder-ism, but we now know it can also make you money.” Payne takes pride in making a difference, even in a for-profit field, by using her business skills to make non-profits more efficient. Shamasunder echoes her sentiment. “MBA education gives you the skills to approach management and finances and to really see how an organization is run,” he says. Whether the    newest    MBA graduates work at a nonprofit or for-profit organization, he believes they will bring a socially responsible attitude to their jobs. “A lot of people are interested in changing the way business is being done,” he says. “They want social change to be part of their job, wherever they end up.”

In Associate Professor Ed Soule’s Leadership and Business Ethics class, students can influence corporate America’s social impact even before they graduate. Through a program Soule developed over the course of the past five years, students critically analyze the CSR strategies and public disclosures of leading corporations. Senior managers from the companies work with students at the launch of a project, and at the end, students present their findings. Most recently, students had the opportunity to work with executives from Coca-Cola Enterprises.

“It’s a very valuable experience,” says Soule, who would like to create an elective that focuses solely on this work. “Some students have absolutely no interest in this subject, but after they do this, they see it’s not just a bunch of save-the-whales stuff — it’s serious business.” It is also a valuable experience for the companies. Students are a source of unbiased input and, as Soule explains, “Companies benefit from our diverse student body.”

A similar partnership came about with Cisco Systems after Jenny Bradley Heflin (BSBA ’03, MBA ’10) interned there last summer and talked about Soule’s course. Last fall, she led a tutorial team to evaluate Cisco’s CSR strategy, including a very lengthy CSR report. In the end, the team suggested Cisco weave CSR into its annual report — a growing trend — and also mocked up a shorter CSR communication device.

“The Cisco executives were elated with the results,” Soule says. “I’m confident that many of our recommendations will be implemented. There’s no better way for students to learn about managing the social and environmental impacts of a global company.”

The Seeds of Social Enterprise
Last spring, before Rahul Pasarnikar (MBA ’11) decided to enroll at Georgetown’s McDonough School of Business, he talked to Novelli on the phone about the future of social enterprise at Georgetown.
“I was on the fence about coming to school,” says Pasarnikar, who had worked as a consultant for the previous 13 years. “Initially, I was disappointed that Georgetown did not have a formal social enterprise initiative that could potentially cross multiple disciplines. I felt that to truly resolve social issues in a systemic way, solutions needed to cross sectors.” When he heard Novelli envisioned just such an initiative at the school, disappointment gave way to opportunity.

Today, Pasarnikar is president of Net Impact and leads a five-student team exploring opportunities for a social enterprise initiative. An increasing number of top universities recognize the need for similar initiatives to remain competitive in the face of growing student demand.
“It’s still very early, but we want to put together a strategic plan of what an initiative might involve,” Pasarnikar says. “The goal is to figure out what kind of role business plays in social enterprise.”

Novelli, the faculty sponsor for this largely student-driven effort, says it will incorporate other areas of the university, such as foreign service, social justice, and public policy. He envisions three components: teaching, research, and service. The research area proves the most challenging for many working in this field: How do you measure behavioral change? When are people most receptive to suggestions of change? What is the social return on investment? Is there a way to measure quality-of-life improvements arising from social enterprise?

“It’s very hard to measure,” Novelli says. “But it’s important to do so, and it’s much more than measuring profit and loss. Having this initiative housed at the university, with all its qualitative and quantitative skills, will help us understand these questions.”

Novelli would like to see a two-way bridge in business leadership, too. “We’ve always had people going from the forprofit world to the nonprofit world,” he says. “When we also have people going from nonprofit to for-profit and they’re accepted for their strategies, we’ll have a strong cadre of people who are out there making change.”