By Robert Strauss
Who: Wharton Alumni
What: Alumni Weekend
Where: Wharton and environs
When: May 14-16, all hours of the day and night
Why: To see friends and classmates, socialize, network, attend workshops and alumni/faculty panels, dance, picnic, catch up on school news…
And more. Wharton Alumni Weekend 1999 together close to 700 graduates and their guests from the classes of WG’94, WG’89, WG’84, WG’79, WG’74, WG’69, WG’64, WG’59, WG’54 AND WG’49 – the first time 10 MBA reunion years have celebrated at once.
Not only were there more reunion years than ever, but 1999 also saw Wharton’s first “course” reunion – a gathering of recent alumni who took assistant management professor Gabriel Szulanski’s class on strategy-making while they were students. The group met on Saturday at the Steinberg Conference Center.
For other returning alumni, the weekend offered three beautiful sunny days in which to reestablish contact in a variety of venues. These included alumni/faculty exchanges on “The Changing Economics of the Health Care System” and “Making the Break from Employment to Entrepreneurship;” a roundtable discussion on the Wharton curriculum; and an executive education session with finance professor Jeremy Siegel titled “Perspectives on the Market: Are Stocks Still a Buy?”
There was also a Class of WG’54 alumni/student exchange, a class of WG’74 presentation on international finance, a town meeting with Penn president Judith Rodin and outgoing dean Thomas P. Gerrity; an alumni workshop on “Career Transition” and a Class of WG’89 video, “The Wharton Years.”
On the following pages we highlight some of the activities of Reunion Weekend and profile six Reunion year graduates.
Laurance Narbut, W’94: Rolling Up His Sleeves in Russia
In 1998, Laurance Narbut had three job offers from companies in Russia. He chose Moscow-based SUN Capital Partners, a private equity fund run by Wharton alumnus Shiv Vikram Khemka, WG’90.
It was a good choice. SUN Capital is the only one of the three companies still solvent.
“Making investment decisions in a climate of uncertainty is one of the biggest challenges of the job,” says Narbut, in what may be an understatement. Take regulatory issues. “Regulations change day to day,” he notes. “For example, a reduction in the Value Added Tax was passed at the beginning of 1999 which would have significantly reduced the final cost of our products to Russian consumers, theoretically increasing demand. To compensate for this decrease, regional governments were permitted to institute a sales tax. Unfortunately, the decrease in the Value Added Tax never materialized and now consumers are faced with the additional sales tax, making our products more expensive for the end consumer.”
Or consider management issues. “Finding market-oriented managers is extremely difficult, ” Narbut says. “Previously, company managers were rewarded for meeting planned production levels set for them by the Central Planning Agency.” Sales, marketing, product quality, distribution, operational efficiency, cash flow and profitability were not major managerial concerns.
Today it is different. “Our companies’ products have to be able to compete in foreign markets and defend against multinationals in the domestic market. Often we must work with managers on a daily basis for extended periods of time to teach them western business principles.”
That said, Narbut and SUN Capital appear to be doing well. The company, with eight professionals, 30 employees and a $155 million investment fund, focuses primarily on the food processing, lodging and oil and gas sectors. Narbut’s exposure to different companies has been varied. He sits on the board of a $25 million chocolate company, Voronezh Confectionery, located in a town 300 miles south of Moscow; has evaluated various potential investments, including a satellite telecommunications company in Kyrgystan, one of the former Soviet Republics; and last April helped close a deal between SUN Brewing, another company of the Khemka family, and Belgium-based Interbrew SA, the fourth largest brewery in the world.
Narbut, who grew up in New Hope, Pa., joined Credit Suisse First Boston in New York after graduating with a dual degree from Wharton and the College of Arts and Sciences. He went to Harvard Business School from 1996 to 1998, and then took an intensive two-month Russian language course at Middlebury College in Vermont. “Essentially I see the entire Russian market as a big rest ructuring project,” he says. “The mass privatization of companies that has occurred in Russia over the last few years comprises what will probably be the largest transfer of assets from government to private ownership that I will see in my lifetime.”
Narbut plans to begin researching investment potential in export-oriented companies as well as the software and computer technology industries this summer. “When I a rrived, the effects of the August 1998 devaluation were already apparent: foreign investors had lost faith in Russia, the banking system was in shambles, and the government was struggling to fill the power vacuum left by Yeltsin’s prolonged absence,” he says. “I felt it was going to be a ‘roll up your sleeves’ type of opportunity. It certainly has been.”
Michael J. Kowalski, W’74: Diamonds Are Forever at Tiffany
“If there is a common denominator among the people who work here, it is an intense passion and love for the product. We are in the business of creating beautiful objects for everyday use.”
If you guessed that the company described above is Tiffany, you are correct. And while “the product” referred to includes such items as sterling silverware, china, crystal, watches and stationery, the “heart of the business” remains the diamond engagement ring, says Michael J. Kowalski, president and CEO. “We are an authority on gem stones, whether the ring costs $950 or $950,000. At our core we are jewelers. That is the foundation of our competitive advantage.”
Kowalski’s devotion to Tiffany is evident both in his rise through the company, where he has been since 1983, and his strong belief in Tiffany’s high-quality merchandise, people and reputation. It is, indeed, an unusual company.
For example, perhaps the most critical qualification for a Tiffany manager is “product expertise,” says Kowalski, noting that the senior vice president of merchandising is a gemologist with a background in investment banking. “We are very much a design-driven company. As long as we do not compromise our product and service standards we feel we can manage growth in a way that doesn’t hurt the Tiffany image.”
The company, with worldwide sales of $1.2 billion, net earnings of $90 million and 4,800 employees, owns and operates the vast majority of its more than 100 stores and boutiques. “We have never licensed the Tiffany name nor have intentions to do so,” Kowalski says. The company’s biggest market is the U.S., its second biggest Japan. Earnings have grown 32 percent per year on average over the past five years, with jewelry making up 74 percent of Tiffany’s worldwide sales.
After graduating from Wharton, Kowalski spent a year as a credit analyst at Bankers Trust, earned his MBA from Harvard, worked as a consultant for six months and then joined Avon Products in 1978. While he was there, Avon acquired Tiffany and in 1983, Kowalski became Tiffany’s director of planning. In late 1984, after Avon had announced its intention to sell the jewelry retailer, Kowalski was a “junior member” of a management group that led a successful buy-out effort. Kowalski moved up to become group vice president of merchandising in 1986, executive vice president of marketing and merchandising in 1992, president in 1996, president and chief operating officer in 1997, and on February 1, president and CEO.
A major challenge for Tiffany over the past decade has been “communicating the fact that there is broadly affordable product here and at the same time that there is wonderfully luxurious product available as well,” Kowalski says. In other words, making Tiffany’s luxury items both accessible and “aspirational.” “We have also worked hard to educate our customers as to the various types of diamonds, not just the size, but the cut, clarity and color, and the long-term value we believe they carry.”
Another challenge, a perennial one, is ensuring access to the “perpetually short supply of quality diamonds,” Kowalski notes. While Africa and Russia are the major sources of diamonds, jewelers are now looking to a new diamond mine that opened late last year in Canada’s Northwest Territory. “Although diamonds were discovered there a decade ago, it has taken 10 years to confirm that they were present in economically mineable quantities,” says Kowalski.
“The creation of fine jewelry is an art,” he adds. “It doesn’t lend itself to machine-produceable techniques.”
J.D. Power, WG’59: Driving Customer Satisfaction
J.D. Power III has owned some real lemons in his time. “I bought the Oldsmobile Diesel in 1978 and that was a disaster,” says Power. “I drove a Jaguar when they were not very good. After that, it was an Audi 5000, the alleged unintentional acceleration vehicle. I currently drive an Impala SS and that is out of production now. I got one of the last ones off the line.”
Now, we’ve all had a bad experience or two with cars, but Power is the one guy whom you’d think would be exempt from all that. He is, after all, that J.D. Power, founder and chairman of J.D. Power and Associates, the firm that made its name rating customer satisfaction of automobiles.
“Yes, that’s the first question people ask me when they find out there really is a J.D. Power: What kind of car do you drive?” chuckles Power, who prefers to be called by his middle name, David. “But I’ve made it a policy not to drive the cars that rate very highly in our surveys, just so we wouldn’t be accused of favoring a particular make.”
Though his company is most well-known for the car satisfaction surveys, Power has expanded the business to include travel surveys, particularly of airlines and hotels, as well as surveys of industries like health care and telecommunications.
But Power might never have been at the top of his particular game were it not for an unlikely product: chain-saws.
Power was working for a market research firm in 1967 when he helped the McCullough Corp., an L.A.-based engine maker, bring its chain saws from professional users to a consumer market. McCullough asked him to come on board as director of corporate planning. A year later, in 1968, when Power decided he wanted to start a market-research business on his own, McCullough graciously signed on as his first client.
“I was working out of the kitchen of my house in suburban Los Angeles. It was a little scary,” notes Power. Soon, however, a friend called and told Power that a Japanese car company named Toyota was interested in the U.S. and needed some market research. Power had worked as a financial analyst for Ford and as a consultant for General Motors after graduating from Wharton. He took on Toyota as a client.
Eventually, he says, Toyota became a much bigger company with American staff and “stopped listening to our findings” as they created their own internal research group. That’s when Power decided to do his independent ratings survey of customer car satisfaction.
One of his first insights was that consumers expected different things from different cars. The person driving a Mercedes had greater expectations of the car and the salesperson than a person driving an inexpensive compact.
“The advantage we had in 1971 was the flood of Japanese imports coming in – Honda, Isuzu, Datsun, Mazda, Subaru, Mitsubishi, Toyota,” he says. “They wanted a part of the market and were interested in the types of studies we were doing. We were able to sell them our independent surveys. In the past, this kind of thing was always done on a commissioned basis by an individual corporation or by a syndicate of corporations. No one had done it on an independently funded basis where we owned the data. This permitted us to talk publicly about the results. Of course, that made the press interested and the press delivered the message to the CEOs.”
Power grew up in Worcester, Mass., attended the College of the Holy Cross and served for four years as a line officer on a Coast Guard icebreaker before coming to Wharton. After 36 years in Los Angeles, “I feel like a native. Three of my four children were born here, and I’ve learned to drive the freeways,” he says from his company’s Agoura Hills headquarters.
“On the other hand, I am now traveling about 80 percent of the time. Our clients work globally which means we need to service them globally. We have offices in Tokyo, London, Singapore and Australia.”
Since the J.D. Power and Associates surveys now include hotels and airlines, Power is careful about how he signs his name. “I register as J. David Power and that throws people off,” he says. “People are startled for the most part when they see my name,” he adds with a laugh. “I guess they think it’s computer-generated instead of a real person.”
Of course, J.D. Power and Associates is more than just one person. At last count, it’s 500 of them. “From my kitchen table to 500 employees. Whew!” he says. “It’s been a wonderful ride.”
Shaz Kahng, WG’89: High-Energy Consulting
Spend some time with her and there can be little doubt about Shaz Kahng’s energy level.
She has logged several million miles over the last several years as a consultant for Kurt Salmon Associates, the global management consulting firm that specializes in consumer products and retail industries. Kahng is the company’s first female minority partner.
Her exercise schedule includes running, jazz dance and boxing workouts at a Wall Street gym. Her vacations are spent skydiving or scuba diving. Her latest trip: looking for hammerhead sharks off the coast of Papua New Guinea.
There are past achievements as well. In her pre-Wharton days, as a research scientist at General Foods, she invented a synthetic blueberry that could be easily digested, cooked and preserved in baked goods. And two years ago, persuaded by a director friend to invest in a film, Kahng became the co-executive producer of Sunday, which won the 1997 Sundance Film Festival Award.
Yet none of this seems to have gone to her head.
“When I look around at my friends, especially my Wharton classmates, I see them doing such interesting things. They are changing careers in midstream and the like. And that is what is inspiring,” says Kahng. “And I look at my father, who came to the United States from Korea at age 19. He didn’t know a word of English and he ended up as a professor of labor law. Now that is an unbelievable achievement.”
Kahng grew up in Morristown, N.J., and went to Cornell University where she got her bachelor’s degree in chemistry and food science. While doing such work as the invention of that artificial blueberry in the research labs of General Foods, Kahng wondered about some of the management decisions that were being made above her.
“In the lab, we would be trying to adapt new technologies and apply them to products,” she says. “We would present them to marketing and they would decide what to fund. I often wondered why they would select what they did because some of the projects they chose didn’t seem to be consumer focused. I went to business school to understand the decisions they were making.”
After Wharton, Kahng worked at Towers Perrin and Gemini Consulting before joining Kurt Salmon in 1994. She was made a partner there in 1996. Kahng is concerned that many companies have resisted attracting female and minority managers.
“I think it is evolving, but it is extremely slow. I’m still meeting senior executives and not seeing a lot of women or minorities,” she says. “Companies that are going to be successful in these competitive times are those that recognize diversity. We tell companies that they are going to have to understand their customers better and one good way of doing that is to have a better ethnic and gender mix in management.” Kahng admits that American companies are better in this regard than most she has seen in her Asian travels. One time in particular, while doing a presentation in Japan, she entered a room with 40 male executives and a female translator about her age.
“The project manager introduced me as Shaz Kahng and the executives all started laughing and pointing at me. They must have thought they were being fooled, that I was another translator,” says Kahng. “They expected Shaz Kahng to be a white man.”
Kahng says that the big issue for retailers right now is to figure out how Internet sales are going to fit into their businesses.
“You have consumers shopping across multiple channels. The Internet, the old brick-and-mortar store and catalogues are all going to have to be seamless for the consumer,” she says. “The truly successful companies will be those that integrate these channels better and better. In the future, what consumers will be looking for in brick-and-mortar stores will be more entertainment and more service. This change will, in the end, be good for everyone.”
Claudio Goldbarg, WG’94: Showtime at DreamWorks
It’s the detours Claudio Goldbarg took along the way that led him to his current job at DreamWorks SKG.
These include a year working in a book store/coffee shop in New York City (1994-95) while consulting in the telecommunications and financial services industries, and a year with Activision (1995-96), a video game company in Los Angeles where he helped adapt particular products for sale in foreign countries, including Earthworm Jim, Mech-Warrior II and Spycraft.
The bookstore, Goldbarg explains, was a Barnes & Noble on the upper West side of Manhattan where he worked “for spending money and health benefits” while looking for a job in interactive entertainment. “Occasionally a bunch of Wharton people would come in, see me and wonder if maybe I was on a consulting job to reengineer the company. They were a little shocked to learn that I was just a regular employee,” says Goldbarg, who graduated with a degree in economics from MIT and worked for three years at Kidder Peabody before getting his MBA. “But I was one of those people at Wharton who knew that when I finished business school I didn’t want to do something typical like banking or consulting. I wanted to do something unique.”
In 1996 he landed his current job in finance at Los Angeles-based DreamWorks, the broad-based entertainment studio with feature film, animated film, television, music and interactive game divisions, headed up by Steven Spielberg, Jeffery Katzenberg and David Geffen. Goldbarg is in charge of strategic planning for the television division.
“We’re up and running but our goal is to get more successful shows on the air that are high quality and add to our profitability,” he says. DreamWorks currently has “Spin City” and a midseason series called “It’s Like, You Know…,” both on ABC. By high quality, Goldbarg means “well-written as opposed to mass-appeal, low-common-denominator sort of stuff. We don’t want to produce junk.”
Television is a “different medium,” Goldbarg adds. “You aren’t master of your own destiny. Movies you can make and release. In television, our primary customer is the network. Given what’s happening in the business, there is less and less risk being taken by networks in their programming. Choices aren’t always based on the creativity or the quality of the program…
“A lot of the problems are structural to the industry. And with the increasing popularity of the Internet and the growing number of cable channels, network viewership has been declining and will continue to decline. That means we need to explore what other distribution avenues are available, like cable, international markets, video and possibly TV shows on the Internet.”
Working for DreamWorks is, well, a dream, Goldbarg says. “The material you are dealing with is talent driven … At the end of the day you are working on shows and ideas that reflect trends in culture and society. When DreamWorks’ Saving Private Ryan was released, it was an exciting time around here because we work for a company that produced a very revolutionary picture and changed the whole war movie genre.”
Goldbarg, who lives in Beverly Hills, says he might some day want to get more involved with the production side of television. And maybe even get back to his favorite place, New York City. “But for now,” he says, “I’m learning a lot about the industry in a company that is well-run by quality people.”