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Sun Apr 24 04:19:20 EDT 2011
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Tuck Faculty Among HBR’s McKinsey Award Winners - “Stop the Innovation Wars,” an article by Tuck faculty members Vijay Govindarajan and Chris Trimble T’96 that appeared in the July-August 2010 issue of Harvard Business Review, has finished second in HBR’s 52nd-annual McKinsey Awards. Judged by an independent panel of business and academic leaders, the annual McKinsey Awards recognize outstanding articles published each year in the management journal. Govindarajan, the Earl C. Daum 1924 Professor of International Business, and Trimble, an adjunct associate professor at Tuck, shared second-place honors with Roger Martin, dean of Canada's Rotman School of Management. In their article, the authors offer firms a model to bridge the inherent divide that exists between a company's innovation team and the unit responsible for ongoing operations. Their approach, which calls for a partnership between the two groups, breaks with conventional wisdom that suggests the best way to manage hostilities is to sequester those doing the innovating. That may ratchet back infighting, say Govindarajan and Trimble, but it also stifles innovation. “When a large corporation asks a group to innovate in isolation,” they write, “it not only ends up duplicating things it already has but also forfeits its primary advantage over smaller, nimbler rivals—its mammoth asset base.” Govindarajan and Trimble have spent the past decade researching innovation initiatives within companies. Many of those cases are brought to life in their most recent book, The Other Side of Innovation: Solving the Execution Challenge (Harvard Business Press, 2010).  

Project GreenLite - When it comes to getting people to turn off the lights, there are few things more motivating than a bedraggled cartoon polar bear. At least, that’s judging by the results of GreenLite, a social energy-use monitoring program introduced in select Dartmouth residence halls three years ago and to Tuck student residences in the spring, thanks to a gift by the Tuck class of 2010. Developed by a team of Dartmouth undergraduates in the environmental studies, computer science, and digital arts departments, with the help of Dartmouth computer science professor Lorie Loeb, GreenLite uses meters to collect data on energy usage that students directly control, such as outlets and lighting. Using a weighted algorithm, the data are compared with long-term trends to create a “mood score,” which is translated into animations of a cartoon polar bear displayed online and on monitors in student residences. If students use more energy than usual, the bear might look dejected while rain pelts her ears or might even break through the ice into the water. If energy usage is low, the bear’s cub might run up and cuddle or happily chase a seal around the screen. “What we’re trying to do is create an emotional connection to the data,” says Loeb. “Turning a light on and off may not directly mean that the polar bear’s environment is getting warmer, but it does at the same time.” The program has seen enormous success at Dartmouth, reducing overall energy use in student residence halls by 10 percent, and has expanded to most other residences and some administrative buildings. Students have named the bear and changed their habits for her well-being—one sorority even reported holding meetings in the dark. In April, seven GreenLite monitors appeared in Tuck residence halls, with an additional Bloomberg-like data feed and a cartoon penguin representing energy costs. In the fall, Tuck Sustains, the student sustainability initiative, plans to launch an awareness campaign to foster healthy competition between floors. “We hope not only to support the more philosophical piece of the equation but also to make a real difference in terms of the environmental footprint,” says John Sullivan T’11, co-chair of Tuck Sustains. He adds that submetering and the psychology of how social awareness affects behavior have relevance in a business context. “It doesn’t surprise me that the class of 2010 would leave this as their gift,” says Sullivan. “It’s a community initiative pertinent to the business world. It’s the gift that keeps on giving.” —Kate Siber D’02 April 2011

The Long Goodbye: Letting Go of Fannie and Freddie - In the boom before the bust, credit was easy and home values appeared bound for the stratosphere. Many analysts assumed the two were in a symbiotic relationship—that credit availability led to rising real estate prices, which then led to further credit availability. Tuck assistant professor Manuel Adelino, an expert in mortgage-backed securities and mortgage renegotiation, has looked at the data. In a paper soon to be presented, he shows a direct causal link between cheap loans and the rise of the housing market. Adelino’s research is especially timely as Congress considers how to wind down Fannie Mae and Freddie Mac, the largest mortgage companies in the nation. The government took over Fannie and Freddie in 2008, at a cost of $135 billion, and there is broad consensus on both sides of the aisle that it is time to end its involvement. The only questions are how and when to do it. The problem is that Fannie and Freddie essentially subsidize mortgages, keeping interest rates lower than they would be if the private market were functioning. According to Adelino’s research, if Fannie and Freddie were to disappear, “you would in all likelihood see a drop in housing prices nationwide,” he says. To see the connection between interest rates and real estate values, it helps to go back to the salad days of 2006. Up until that time, Fannie and Freddie had about 70 percent of the mortgage market share, with the rest gobbled up by private securitization. But by 2006, that ratio had flipped. Private lenders were able to offer lower interest rates to homebuyers, and then sell those mortgages in bundles to investors, because of an implicit guarantee that Fannie and Freddie would cover any defaults. Adelino, who teaches the Futures and Options Markets elective at Tuck, says this credit bacchanal fueled the real estate bubble because zero-down, teaser-rate loans suddenly allowed people to afford more expensive housing. But when it all came crashing down in the fall of 2008, the private mortgage market vanished, and Fannie and Freddie’s market share swelled to nearly 100 percent. “What that tells you,” Adelino says, “is that nobody else is willing to lend to homeowners at the same interest rate that the government agencies are offering right now.” With Fannie and Freddie at risk of going under, the government stepped in to prevent further damage to the housing market and the economy as a whole. Just like the tax deduction for mortgage interest, the nationalization of the mortgage market is costing the government billions of dollars per year. Yet both are forms of economic stimulus, in effect making it cheaper for people to buy and own homes. With new home construction at an all time low, and the latest Case-Shiller Home Price Index showing a decline from December’s prices, dissolving Fannie and Freddie quickly could throw the U.S. economy into another recession. In fact, the timing of the wind-down is one of the key points of disagreement between Republicans and Democrats. House Republicans recently unveiled a package of eight bills that would dissolve Fannie and Freddie over the next two to five years. The Obama administration envisions the process taking up to a decade. Unfortunately, Adelino says, there will never be a good time to let housing prices drop. “The best case scenario is a gradual removal of the subsidy to try to make it go smoothly and avoid a shock in the market.” —Kirk Kardashian April 2011  

Media, Sports, and Entertainment Symposium - {media1}Tuck’s annual student-run Media, Sports, and Entertainment Symposium began with a screening and question-and-answer session with Nelson Cheng, somebody, symposium co-chair Elissa Kline T’11 says, “who’s essentially just like Tuck students.” Cheng has created a series of webisodes called “The Consultants” — a show in the vein of “The Office” that replaces middle-managers with highly paid back-office desk jockeys who take themselves too seriously. But Cheng isn’t your average filmmaker; he’s a former product manager at Amazon and Google. “I think that just reflects how everybody’s empowered now to be a producer and a writer,” Kline says. With that same spirit of inclusivity, the broad theme of this year’s symposium, which ran from March 31-April 1, was “the state of the media” and featured panel discussions on the business of social gaming, the changing landscape of the sports industry, and the evolution of advertisements from print to banners to video. “We’re trying to give a wide view of what’s going on,” Kline explains. The keynote talk on Friday was given by Michael Montgomery D’76, T’77, who runs Montgomery & Co., a boutique investment bank in California that focuses on mergers and acquisitions and raising capital for private companies in the online media and technology sector. Montgomery was in conversation with Matt Rightmire T’96, formerly VP at Yahoo! and currently Managing Director at the Hanover-based venture capital firm Borealis Ventures. Montgomery “understands what’s coming and where the investment opportunities are,” says Kline. We caught up with him on his way to Tuck to learn more about his career and where the online media industry is headed. You’ve worked for companies such as Disney, DreamWorks and Sega GameWorks. Talk about the path you took to where you are today, and why it makes sense. I think one of the values of my great Tuck education is it allowed me to change careers and to not do the same thing for 40 years. I started off in the oil business and I got a great experience at ARCO for almost nine years, both in doing deals and understanding finance and learning how to be a businessman. Then I went to Disney, where I was the chief deal person for almost eight years. So the art of finding a compromise, being creative, seeing opportunities to do things and bringing parties to bear, was very important. I had several detours, where I’ve actually ended up running companies, which has been very interesting—maybe a little different from the deal aspects of what I’ve done in the past—but equally valuable. Ten years ago, I wanted to be in a more entrepreneurial environment, so I joined my brother and formed this company. At that point, it was a chance to be my own boss and to have a direct shape in building something. But I had a lot of deal experience so I was confident that I could get people to hire me to do transactions. It wasn’t an easy transition. It took a couple years, but once it got going, it’s been a real treat. How do you define media today? Media is anything about content: about what people watch, where people get information. It’s not just entertainment. I broadly define it as the creation and distribution of content. At Montgomery, our focus has always been on how technology impacts media. What questions are you thinking about today as you advise clients on the potential for media and technology companies to be profitable? Where are the companies being created that are disruptive to existing companies? Those are the companies I want to bank. If I can find them, those are the companies that can become very valuable very quickly, because they’re more innovative than the bigger media companies. A lot of our work is trying to see where things are going and trying to identify the winners in those spaces and then hopefully building a relationship with them so that we can be their banker. What general qualities are you looking for in such companies? You always start with the management team. That’s the hardest thing to find. When you get one that’s smart, experienced, driven—with a good idea —that’s the best. A good idea with a poor management team never works. A great management team even with an OK idea oftentimes works. As far as ideas go, are you seeing trends in what’s working? We’re seeing trends, but you have to be careful because you can get surprised so quickly. Who would have guessed Twitter was going to work? Some things are obvious, like Facebook, and some things are not so obvious. Then there are things that are obvious that don’t work for a while, like these cloud-based storages like Box.net—they’ve been around for 10 years and they’ve never taken off until now. What are the major challenges and opportunities today in online media? Social media is changing the face of media so quickly. It’s interactive media now, it’s engaging—it’s not just sit back and watch a video or a film or TV. The new generation wants to engage with it—they want to chat about it, they want to mash it up and do something with it, share it with their friends. And a lot of their discovery is word of mouth through the social networks, which is very different than what traditional media had to do. Games have become such an enormous element of the media landscape. It’s not just hardcore games, it’s casual games and using games for advertising. The notion of making things fun and interactive is changing media dramatically. What are some companies flying under the radar but with great potential? There are tons. If you’re young, you’ve got companies like Mind Candy, which makes Moshi Monsters, just exploding for the eight-year-old crowd. They’re adding a child per second onto their sites. You’ve got cloud-based applications. You’ve got game companies like Zynga that have just exploded in the last couple of years. You’ve got Groupon and Living Social—the whole notion of couponing and local advertising. You’ve got some mobile companies that are just extraordinary in how fast they’re growing in mobile advertising and the provisioning of mobile. And I think the tablet has had an enormous impact already is profoundly going to change education. These are all opportunities where companies can become very large very quickly. —Kirk Kardashian April 2011  

Health Care Data Leaks - For nearly 10 years, Tuck professor M. Eric Johnson has prowled the internet searching for data leaks from so-called secure systems. He first did this for the banking industry, and he found so many customer account numbers and pieces of internal correspondence that he was called to testify before Congress on the problem. Three years ago, Johnson, the Benjamin Ames Kimball Professor of the Science of Administration and director of Tuck’s Center for Digital Strategies, focused his attention on the health care sector and discovered huge piles of sensitive patient data readily available on public peer-to-peer networks. Johnson’s latest health care-related research pivots from ringing alarm bells to crafting solutions. His first significant finding is that software usability—or the lack thereof—is one root cause of data leaks. A second line of inquiry, still a work-in-progress, indicates that investments in information security work best when made proactively and voluntarily. The stakes in this game are high—breached data costs the industry $6 billion per year, and is added to the already astronomical health care tab—so Johnson’s work comes at a crucial time. “Usability” is a term of art in the computer software business. It’s a measure of how intuitive, helpful, and just plain easy a particular program is to use. Apple’s iTunes, for example, might score high marks for usability. On the other hand, if manipulating a piece of software is laborious, confusing, and frustrating—you know it when you see it—its usability suffers. The problem for the health care industry, which is highly fragmented and has a wide range of user sophistication, is that “when software is not usable, we create workarounds,” says Johnson. And workarounds—transferring data from a hospital’s proprietary billing software to an Excel spreadsheet, for instance—put data in a portable format that can easily leak out to the Internet in various ways. Johnson identified two categories of at-risk data caused by the usability issue. The first he calls “born-vulnerable,” which is data that is created in an unsecure format such as a nurse’s notes entered into a Word document. The second is so-called “moved-vulnerable” data. This is information that began in an enterprise system but was transferred to a more usable form. The most common types of moved-vulnerable data, according to Johnson’s research, are spreadsheets created from human resource, operational, research and analysis, and financial data. Under the latter category, Johnson has found spreadsheets from a Texas hospital chain that were leaked to peer-to-peer networks, containing 20,000 patient files. Each file contained 82 fields of information such as diagnoses, insurance numbers, addresses, and phone numbers. “Intensely personal stuff,” Johnson says, “but information that could be used to drive a lot of fraud, too.” Leaks of born-vulnerable data files might be high in number, but each file usually exposes just one patient. Moved-vulnerable data leaks are less common but more dangerous—a recent leak from Health Net, for example, affected two million people. If the answer to these breaches is better usability, then the entire health care industry, from the solo practitioner pediatrician to hospitals and health insurance giants, needs to come up with better software. That’s not going to be easy, or cheap. Johnson’s other related research addresses this point. He examined the effects of information security investments made both before and after data breaches, and looked at instances where the investments were instituted after internal decision-making, or as a result of external mandates. The results indicate that investments in information security work best when made proactively (before a breach) and voluntarily (not forced by a regulatory regime). Why don’t mandated information security regulations work? Because, Johnson says, they aren’t holistic in scope, and they often solve last year’s problems in a one-size-fits-all way that isn’t easily applied across the spectrum of the health care industry’s players. Thankfully, Johnson asserts, it appears that the federal government has created a framework for effective information security innovation, through the 2009 Health Information Technology for Economic and Clinical Health Act (HITECH). The law not only imposes fines for violations of the privacy and security rules in the Health Insurance Portability and Accountability Act (HIPAA), but beginning in 2011 physicians and hospitals are eligible for significant incentive payments if they demonstrate meaningful uses of electronic health records. These financial encouragements stand the best chance, Johnson says, of getting the health care industry to adopt more usable, and thus more secure, information technology practices. Even after HITECH was passed, Johnson was able to find the same amount of private health care data in peer-to-peer networks that he found before. But he hasn’t lost hope. “I think it will improve slowly,” he says, “but it will be slowly, and by that I mean a decade.” —Kirk Kardashian April 2011  

The CEO’s Speech: The Importance of Public Speaking - If there’s one thing audiences should take away from The King’s Speech, the Oscar-winning account of King George VI’s struggle to overcome a debilitating stammer, it’s that if you want to be a leader, you had better be able to communicate. Tuck corporate communication professor Paul Argenti understands this well. In the MBA classroom, in executive education programs, and as a consultant to corporations and non-profit organizations, Argenti provides students and professionals with communication skills and strategies that are essential to success. Tuck has been doing this in one form or another since it was founded in 1900—the first class of four men had to take a course in rhetoric. Argenti says there are three elements in every great speech: content, structure, and delivery. “And if you could only have one thing,” he notes, “delivery would be it.” What makes a good delivery? Just think of the qualities you look for in a person: authenticity, empathy, passion, and the ability to lock eyes with people in the audience, making them feel like they are the only ones in the room. If that sounds easy, you have to remember that nobody just rattles off an excellent speech: smoothness comes from polishing, and then polishing some more. Argenti puts three to four hours of preparation into his course lectures, dissecting each point and thinking about how he will present it, what examples he’ll use, and what he will say. “Doing your homework is absolutely critical,” he asserts. The King’s Speech reminds us that doing your homework includes honing your oratorical chops. “It’s not like you’re born with this gift and only some people have it,” Argenti says. “Anybody can do it.” The noted Greek orator Demosthenes was born with a speech impediment, so he practiced speaking with pebbles in his mouth, and he would enunciate drafts of his speeches while running, or go to the ocean and make his voice rise above the sound of the surf. Jack Welch, the former CEO of General Electric, wasn’t a great communicator from the start, “but he cared about people so much and was so passionate and dynamic,” says Argenti, “that he was able to overcome.” Other examples of standout communicators? Bill Clinton: Argenti met him when Clinton received an honorary degree from Dartmouth College in 1995. “He just locked on to me and made me feel like the most special person on the planet.” Ronald Reagan: “Off the charts on charisma. He wasn’t a rocket scientist, but he could speak.” Warren Buffett: “Just amazing. Totally authentic. Totally natural. Speaks in plain language, cares about people. When he talked to me about communications he was the richest guy in the world, but it was like he was my best friend.” Clearly, they are or were part of large teams. Behind the curtain are legions of speechwriters and support staff. For this group to make the leader look his or her best, Argenti says, they have to get the speaker to own the information being presented. “The communicator has to be the auteur,” he says. This requires the ability to write in the leader’s voice and give honest feedback. About the worst thing you can do is always say, “You’re great.” In the final scene of The King’s Speech, King George VI delivers the most important speech of his life to his constituents: in a small radio studio, he smoothly broadcasts that England has declared war on Germany, and dark days are ahead. Afterward, he joins his family on the balcony of the palace to the roar of applause from the public. The country is descending into the hell of war, but the people are comforted by their king’s steady voice. “The ability for a leader to move people through communications cannot be underestimated,” Argenti offers. “I don’t think there’s anything more important.” 
—Kirk Kardashian

 March 2011  

Shelly Meyers T’94 and the Battle Against CO2 - “What really struck me,” she says, “is that this organization was clearly not something that was going to wag its finger at people and tell them they were behaving badly. It was going to use entrepreneurial energy to bring awareness to the greatest business opportunity the economy has seen since the 1890s.” Since then, Meyers has pledged $1 million to the organization and become a founder herself. In December, a team of four second-year Tuck students, visiting professor Anant Sundaram, and Pat Palmiotto, director of Tuck's Allwin Initiative for Corporate Citizenship, joined Meyers and CWR in Cancun, Mexico, for COP16, the United Nations’ Climate Change Conference. Meyers brought CWR to Tuck on March 24 with a talk titled, Inside the Carbon War Room. Her talk was sponsored by the Allwin Initiative. Why the phrase “War Room?” That was one of the reasons I agreed to go to the event at the Rockefeller Estate. Because I thought, These guys mean business. I had no interest in being involved in something where we sit around four times a year and complain and whine. The people who work at the War Room have organized into different industrial areas, such as shipping, energy distribution, electric vehicles, the airline industry, and carbon capture. We broke out the key target areas we felt had the best chance of getting a gigaton solution—avoiding the emission of 1 billion tons of carbon dioxide into the atmosphere. What is unique about the structure of CWR? It helps to solve one of the age-old issues you have when you’re an entrepreneur—you have a brilliant idea, but not a clue how to raise money. Now there’s enough people building up funds directed toward this issue. They have the capital but need more of a structured basis to hook up with entrepreneurs. Everyone who’s involved has that entrepreneurial bug in them and understands capital, so we can serve as interpreters between the two sides.
 What’s a good example of a recent idea/capital connection CWR has brokered? I can’t say too much, because I’m under an non-disclosure agreement, but one is a group headed up by a brilliant scientist and an established entrepreneur that has developed a way of producing gasoline from a source other than crude oil. And this is not a whiteboard concept. We’ve got prototypes and a couple plants on the drawing board. Why is the private sector—as opposed to government investment—the best vehicle for reducing carbon dioxide emissions?
 Politicians are risk averse people. Not only that, but they spend a lot of time seeing which way the wind is blowing. They tend to be followers, not leaders. Whereas the profit motive is a very strong impetus. CWR can show people that this isn’t about nagging people to change their light bulbs or buy a Prius. There is a very strong profit opportunity out there, with what I think is a seminal chance for new businesses. I think that given the mix of people we have, we have a shot at getting that point across.

 What has stuck with you from your Tuck experience?
 I can’t say enough about Tuck. I could not have accomplished what I’ve accomplished without my Tuck education, especially as an entrepreneur. The thing I keep coming back to is the small class sizes, the team projects—that was an incredibly powerful educational experience. The other thing I come back to is the ropes course during orientation. We had to get everyone over a massive wall, and we had no tools except for our own bodies. I remember thinking, We’re not going to get anybody over that wall. And yet we managed to do it. My experience at Tuck was absolutely integral to my daily work life, there’s no question about it. —Kirk Kardashian March 23, 2011

Innovation Ecosystems: Is there a Cost to Collaboration? - {media1}Ecosystems matter. In recent years, firms across a wide range of industries, from technology (Apple, Amazon) to health care (Roche) to defense (Lockheed), have discovered new ways to weave together complex webs of partners as a means to offer superior products to consumers. This ability sets them apart from their business peers, inspiring amazement and praise from customers, admiration and fear among rivals. For many companies, however, such attempts at innovation result in costly failures characterized by broken promises and missed expectations. This is because, along with new opportunities, innovating in ecosystems presents new sets of challenges. What we call “seamless collaboration” in cases of success, we relabel “fragile interdependence” when the outcome disappoints. Across the spectrum of economic and social activity, we are witnessing a crescendo of collaborative aspiration. In industry after industry—the automotive sector’s recent foray into electric vehicles, the security sector’s visions of comprehensive threat assessment, the health care industry’s move to electronic medical records, the list goes on—firms are signing on to increasingly exciting value propositions. Delivering on these promises, however, ties firms to greater complexity: longer chains of intermediaries who all must agree to adopt the innovative vision, and larger sets of so-called complementors who must overcome their own innovation challenges for the focal firm’s efforts to matter. In this way, innovation ecosystems present a new set of strategy and management challenges. To see the contrast, look no further than the examples set by Nokia and Apple. Through the first half of the last decade, Finnish telecommunications giant Nokia held sway in a market defined by product-based competition. Moreover, it knew it wanted to pursue an ecosystem approach when it created the Symbian operating system in 1998 and attempted to entice developers to create applications for the platform. It had long been Nokia’s vision that having software on phones would greatly enhance its core offerings. But Nokia didn’t fully understand what needed to change for this to work. For example, an important element of Nokia’s competitive advantage rested in its unmatched ability to customize a wide variety of phones for operators. This enabled Nokia to offer an array of choices to operators and, through them, to consumers. There was, however, an unintended, and unmitigated, consequence in pursuing this strategy: the high customization costs and indirect path to market that participating in the Symbian platform imposed on software developers. This limited the attractiveness of the offer from the developers’ perspective, which, in turn, handicapped the entire vision. In this way, Nokia’s product strategy undermined its ecosystem strategy. In contrast, Apple’s iPhone offered developers a uniform development environment and a direct path to market. Apple also had a sufficiently large base of iPhone users to motivate developers’ efforts when it launched its App Store in 2008. Nokia’s smart phone vision preceded Apple’s by a decade. But because the company built its strategy around its product business, with complementors in the periphery, its attempt at ecosystem innovation floundered. While Apple’s laserlike focus never wavers from its own bottom line, the company prioritized its complementor strategy once it decided to pursue an ecosystem approach (as witnessed, for example, by developers’ prominence at Apple product launches and in its advertising.) Nokia still makes great phones, but in the mobile phone market hardware is no longer enough. Their phones remain remarkable as products, but they are impoverished as solutions. As the competition shifted from products to ecosystems, the very essence of the game changed under Nokia’s feet. Its recent tie-up with Microsoft is an attempt to reposition itself in a world of joint value creation. While the wisdom of this specific choice has yet to be revealed (I have my doubts), the need to make a new choice was long overdue. Success in an innovation ecosystem is rooted in the same principles of competitive advantage and value creation that have always been at the heart of strategy. But the way in which these principles are applied has changed. When we depend on others for our success, the ways in which we prioritize opportunities and threats, how we think about market timing and positioning, indeed the very ways in which we measure and reward success all need to change to explicitly account for this dependence. The message is clear: The collaborative advantage at the heart of ecosystem-based strategies comes with added peril and promise. Leaders and organizations that go down this path must do so with eyes wide open, not only to the potential benefits of a well-executed ecosystem strategy but also to the risks involved. For the next wave of industry leaders, confronting the new paradigms brought about by innovation ecosystems will not be an option. It will be mandatory. March 2011

Rising Oil Prices: The Libya Factor - Since popular uprisings against Libyan dictator Colonel Muammar el-Qaddafi erupted in mid-February, skirmishes between rebel forces and loyalist armies have made a war zone of the key city of Ras Lanuf, the site of Libya’s largest oil refinery. As a result, Libya’s oil production has decreased from 2.5 million barrels per day to about 500,000. Though this represents only one percent of global oil production, oil prices since the uprisings began have increased more than 20 percent. Is there a strong connection? Dirk Vandewalle, an adjunct associate professor of business administration at Tuck, and an associate professor of government at Dartmouth College, is in a unique position to know the answer. In 2006, he published A History of Modern Libya, and is one of the only American academics to have lived and studied in that country. He was let in to Libya, which the U.S. and other countries boycott, in the mid-1980s because he resided in the U.S. but carried a Belgian passport. At Tuck, Vandewalle teaches the mini-elective “Doing Business in the Arab Gulf States” which, among topics such as Islamic finance and the role of women in the business world, discusses the nuances of petro-dictatorships and the idea of peak oil. “The uprising in Libya,” he says, “is one contributing factor to a number of factors that are driving oil prices higher.” The immediate problem with Libya’s reduced oil production is that its biggest customer, Europe, has had to turn to West Africa for the high-quality, low-sulfur oil it needs. That has caused West Africa’s major oil consumer, Asia, to look elsewhere, and created a ripple effect in the rest of the world. Libya, however, is the world’s 13th largest oil producer, so it can’t, by itself, move the oil market drastically. The larger issue is one of excess supply. Up until recently, oil producers could pump out five to six million barrels overnight if there was a short-term demand spike. “That has shrunk very dramatically over the last few years,” Vandewalle explains, “in part because China and India and other emerging economies also need a lot more oil.” In fact, 2010-11 will be the first year in history that the lack of spare capacity is hitting oil prices hard. But this is not a simple supply and demand issue; there’s plenty of oil to go around now, yet the prices are rising rapidly. This, Vandewalle says, is mostly explained by “pure fear in the markets.” From the moment it looks as if there might be a shortage in the future, commodities traders begin feverishly stockpiling oil. The speculation is so extreme that between the time an oil tanker leaves Libya and arrives in southeast Asia, the cargo will have changed hands up to 300 times. And uncertainty about the stability of Middle Eastern states—Libya and Bahrain are good examples—just fans the flames. Libyan rebels have fought tenaciously in the past few weeks, and the United Nations Security Council has just come to their aid by instituting a no-fly zone. In response, Qadaffi has surprised the world with an about-face, calling for “immediate cease-fire and the stoppage of all military operations” against rebels. Libya, it appears, has narrowly avoided a full-scale war. Pain at the gas pump, on the other hand, is likely to get worse, Vandewalle asserts. By next year, global oil demand is projected to increase by another two million barrels per day, following the pattern of the two previous years. That’s a six percent increase in three years. No matter what happens in Libya, Vandewalle says, “$5 per gallon gas is not out of the question for us by the end of the year.” —Kirk Kardashian March 18, 2011   Photo credit: Joe Mehling

Herbert Kemp, Jr. T’66 - {media1}Herbert Kemp, Jr. T’66, Tuck’s first African American graduate and a pioneer in the advertising industry, passed away at his home in Charleston, S.C., March 5 following a heart attack. He was 69. Kemp came to Hanover by way of Morgan State University, one of the 10 all-black schools that Dean Karl Hill and then-Associate Dean John Hennessey visited in 1963 and 1964 as part of an effort to recruit more black students to Tuck. “Herb from the start was an attractive personality,” recalls Hennessey, who became dean of Tuck in 1970. “He was energetic, imaginative, and he persevered in a very difficult program.” Kemp would later refer to his time at Tuck as one of the best things he ever did. “It was also one of the toughest things I have ever done,” said Kemp, who took on a student loan and work-study job to make ends meet while at Tuck. Yet he didn’t give in or become cynical. In fact, he met with deans Hill and Hennessey regularly during his two years at Tuck to comment on the program and offer advice about making it more welcoming to diverse students. “He was a valued consultant to us,” Hennessey says. And that relationship continued well beyond the day he graduated. 
“He persisted at being a good advisor and came back for many reunions and the 75th anniversary of Tuck,” says Hennessey. Kemp was also active in the school’s African American alumni community and helped mentor students who reached out to him for advice. For his leadership and service, Kemp was awarded the Trailblazer Award in 2006 during a celebration of 40 years of diversity at Tuck. “He took it to heart and knew he was in a special place,” says Andy Steele T’79, Tuck’s executive director of development and alumni services. “At the same time, he enjoyed mentoring students and they knew he was a special person.” The first student Kemp mentored was Mel Fallis T’68. They met in New York City in the summer of 1966. Fallis had graduated from another all-black college—Norfolk State University—in 1965 and was spending a year taking business classes at the Columbia School of General Studies, something Dean Hill arranged so that Fallis would be prepared for the rigor of Tuck. Dean Hill also encouraged Fallis to meet Kemp. “He was a good man,” recalls Fallis about their first encounter. “I felt that he and I had similar backgrounds, having gone to similar schools, and had similar cultural experiences. And then being thrust into an all-white Ivy League situation; I could empathize with him a lot. He talked about the nuances, and that was very valuable to me.” As it happened, Kemp and Fallis entered the advertising industry in the late 1960s and worked together on and off for more than 20 years. First, they broke the color barrier of Madison Avenue, then they helped shape the sub-industry of ethnic marketing. Kemp held senior-level positions at J. Walter Thompson and Ogilvy and Mather and then became president of Uniworld Group and executive vice president at Chisholm Mingo Group. At these firms he helped clients such as Burger King, Texaco, Seagram’s, and Toys ‘R’ Us reach the growing African American market. Kemp excelled in this work because, Fallis says, “he was a real intellectual and a really strong advertising professional. He had good instincts about how to manage clients and he was good at attracting new business.” 
Kemp is survived by his wife, two children, two grandchildren, and a large extended family. They remember him as an avid tennis player, cinephile, and sports trivia buff. In higher education and in the business world, his legacy is that of a trailblazer for the many people of color who have followed in his footsteps. —Kirk Kardashian March 16, 2011