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Building a Strategic Alliance Down Under

August 30, 2012 //

We are at the EMC program privileged to be working with the Business School of the University of Technology, Sydney (“UTS”) in helping develop an experiential learning model similar, but clearly not identical to, that which we have had in place at Temple for more than a decade. We are utilizing as our learning platform for a select group of Australian MBA students three strategic consulting engagements where we are committed to producing “professional grade” results for real enterprises.

We are in this new setting for our model finding again that “live” changes everything about learning business, and for the better. Case studies are an invaluable methodology for learning theory, but that is a process that will always remain incomplete until the consolidation that can only happen with carefully guided application to a real business problem takes place. We are the MBA already “rethought.”

The faculty fortunate enough to be involved in this highly collaborative effort with UTS are themselves learning from the “application” experience as respects the realities of crafting a successful strategic alliance. We know from this experience that the critical elements of actually making a partnership work include:

A shared vision, strongly held.

We both view the development of solid professional skills, in a business setting, as a mission that should be given primacy in MBA programs. Many of these skills develop best through structured interaction with a consulting client, guided by an experienced, “been there, done that” faculty member with significant real world business experience. Would you want a doctor that had never completed a residency?

Our focus is on the mission and operational excellence.

This can only happen because of the alignment of views on what we are seeking to achieve; time and resources do not have to be “spent” on revisiting strategic objectives, as those were set during the comprehensive, mutual – discovery process that led to our partnership agreement. We are thus able to hold the students, project managers and all others involved in the program to a “professional grade” standard as respects program implementation; always the hardest part of any change process.

Neither party believes, “… the way we do things here works, so that is the way it should be done everywhere”; we each have much to learn from the other.

The UTS program in Australia will benefit from our learning curve on developing and running experiential learning models of this sort, and we have already benefited from the fresh insights and meaningful improvements that can only happen when bright, engaged people doing something new work hard to help make it better. Our program in Philadelphia is stronger because of what we are doing in Australia.

 

We both have “flesh in the game”, and interests align.

This is a major undertaking for both schools, it has garnered significant attention both internally and externally, there would be a “cost” in not succeeding that has little to do with money, and is all about assets that are far more important to us both, reputation and brand.

We like each other.

At its roots, a strategic alliance is first and foremost a social network. We work well together because we enjoy doing so; there is a striking and palpable similarity of cultures between UTS and Temple. In our market entry analysis we explored the possibility of working with any number of universities in Australia. That the “fit” with UTS was particularly good could not have been any more obvious. These “soft”, often ill-defined assets are usually at the very heart of differentiating the partnerships in business that work and those that do not.

 

Our goal is to build a global consortium of MBA programs around the world incorporating an experiential learning experience as their capstone program. We could not be any prouder and happier than to have started that larger undertaking in partnership with UTS.

The risk and insurance industry fills a unique role in the world’s economy as a private market mechanism for the sharing of risk, with the global pooling of what would be risks otherwise borne solely by the individual and/or entity estimated at US $100 trillion.   As this risk pooling is instrumental for creating the resilience that underpins the efficient functioning of economies and societies, the insurance industry is clearly a legitimate object of public policy.  As the risk pooling afforded is only possible with investors’ willingness to put capital at risk, value creation is a necessary condition for its continued existence.

The convergence of public and private interests in the industry are nowhere more keenly apparent than in the risks and opportunities presented by “sustainability,” the issues and factors illustrated with a “Taxonomy of Sustainability” developed at the Fox School of Business.  An EMC faculty member and MBA team conducted a global survey of sustainability and the insurance industry on behalf of the United Nations Environment Programme Finance Initiative (“UNEP FI”).  This survey had two lines of inquiry.

First, what is current “state of play” as respects the integration of Environmental, Social and Governance (“ESG”) factors in insurance underwriting?  Secondly, what is needed for the development of a more purposeful dialogue on the role of the insurance industry in response to ESG factors?  From the survey results, five broad themes emerged, each of which is discussed in depth in the publication that resulted from the survey: The Global State of Sustainable Insurance.

Dialoguing on Sustainability & Risk

  1. ESG factors influence underwriting.
  2. Proper management of ESG factors potentially enhances insurance industry earnings via avoided loss and new product offerings.  This in turn could afford greater protection for the insureds’ they serve.
  3. Given their assessment of ESG risks, insurance underwriters judge societal response for many ESG factors as under-developed.
  4. There are significant differences in the assessment of ESG factors dependent on whether an underwriter is operating in the “developed” or “developing” world.
  5. Promotion of ESG risk management and financing requires:
  • Working with a fragmented insurance industry structure to achieve integration
  • Enhanced forums for dialogue between stakeholders
  • Distinct, and sometimes new, skill sets
  • A recognition and respect for interests divergence

Understanding sustainability allows insurance companies to better understand the risks they are assuming, and in so doing, make more money – all while doing the “right” thing as well.

James W. Hutchin
Willis Research Network 

ESG Factors at work

This Saturday, Habitat for Humanity Philadelphia will hold a grand opening for a 19,000-square-foot-retail outlet in Kensington called a ReStore. The Goodwill-meets-Home Depot sells used furniture and other home improvement items at bargain prices. Habitat credits Fox School of Business MBA students with opening the doors to funding, including a grant from the William Penn Foundation. “Habitat for Humanity was kind enough to let us put together a program where we used a full-time MBA class to put together a business plan for their ReStore venture,” said James Hutchin, a clinical professor involved in the school’s EMC consulting practice.

http://philadelphia.cbslocal.com/2011/09/04/habitat-for-humanity-holds-grand-opening-for-its-new-store-in-philadelphia/

Friday, October 8, 2010

Media Contact: Brandon Lausch, 215-204-4115, blausch@temple.edu

Fox School of Business Clinical Professor James Hutchin is one

James Hutchin

of 10 U.S.-based senior academics recently appointed to the Willis Research Network (WRN), which will fund a continuation of Hutchin’s internationally recognized research on sustainability issues and their effect on risk and the insurance and reinsurance industries. Fox researcher Matthew Shea was also named a WRN research fellow.

The WRN, the world’s largest collaboration between academia and the insurance industry, has added the new U.S. partners to augment the 30 science institutions already in the global network. The WRN is an integral part of Willis Re, the reinsurance arm of Willis Group Holdings, the global insurance broker.

Hutchin’s three-year appointment comes with a significant grant to support his research, which will be conducted in collaboration with Shea. In a unique partnership, the funding also will support six projects in the Enterprise Management Consulting Practice (EMC), a required capstone consulting experience in which Fox School MBA students act as consultants to industry clients.

The EMC’s Sustainability Strategies Initiative is a leader among business schools across the world in applied business research on sustainability issues that organizations are seeking to manage. “Lively students working on live projects, delivering professional-grade results” is how Hutchin described the program.

“It’s a really wonderful story about Willis Re looking to sponsor research in that rarified space where financial products and sustainability initiatives converge,” said Hutchin, who commended Willis Re CEO Peter Hearn and WRN Chairman Rowan Douglas for their foresight and leadership. “And, believe it or not, that’s a huge area of interest for the insurance industry. When sustainability issues are not managed well, often the insurance industry ends up paying.”

Hutchin and the other academic partners bring additional expertise to confront the industry challenges of managing extremes and supporting sustainability through research in natural catastrophes, building vulnerability, life reinsurance, capital modeling, workers’ compensation and other fields. The new partners join four existing American WRN members at Princeton University, the National Center for Atmospheric Research, Scripps Research Institute and the University of Colorado.

“The WRN is delivering remarkable improvements in the breadth and quality of science and modeling that will not only aid our clients in their risk management and reinsurance decision-making, but also assist society at large in its efforts to protect exposed populations and property,” said Jim Bradshaw, CEO of Willis Re North America. “We are delighted to support such a broad spectrum of leading U.S. institutions and bring their work and expertise to help our clients and the industry to achieve new levels of understanding and capability.”

Through their appointments, Hutchin and Shea plan to expand research they and an EMC team spearheaded in 2008, when the Fox School led the creation of a global survey – sponsored by the United Nations Environment Programme Finance Initiative – that shed new light on the insurance industry’s approach to sustainability and climate risks.

Hutchin and Shea’s first project through the WRN will be to research Fortune 2000 companies in the U.S. and measure the extent to which “sustainability pays” in enhanced value creation.

“If you are more sensitive to sustainability issues, and if you manage them better, that may well result in an improvement of operational and financial performance,” Hutchin said. “That’s the hypothesis we want to test.”

Using the rich data sources in the insurance industry, Hutchin said their goal is to determine if there is competitive advantage arising from superior risk management of sustainability issues, which include environmental, social and governance factors. Hutchin said the findings he will be working with Shea to produce will eventually be submitted to academic and trade journals, among other publications.

“This is a longstanding interest of mine, and I really think sustainability is all about two things from a business perspective: avoided loss and seized opportunity,” Hutchin said. “So you really need to understand risk before you can deal with sustainability issues, and you have to embed it in business structures around the world if you want to go to scale.”

– Brandon Lausch

Friday, September 17, 2010
Media Contact: Brandon Lausch, 215-204-4115, blausch@temple.edu

Nearly 40 Fox School of Business students recently spent a day engaged in community service with Habitat for Humanity Philadelphia. But no one touched a hammer.

Through a unique partnership, Fox School students crafted business plans and presented recommendations for a Philadelphia ReStore, a Habitat for Humanity outlet that would sell donated building materials at reduced prices.

Fox’s Enterprise Management Consulting Practice (EMC), a required capstone consulting experience, led the business-plan-in-a-day program to show its second-year MBA students what they can expect during the balance of the EMC course. A small group of undergraduate honors students also participated.

The Sept. 14 event carried with it make-or-break stakes. The students, broken into two teams, were tasked with organizing their research, conducting industry and market analysis, and developing strategic positioning and value propositions.

Clinical faculty, outside experts and Habitat representatives from three local ReStores guided the students, who examined marketing, operations, human resources and financials. At the end of the day, they made professional-grade presentations to Habitat representatives and other business executives.

Frank Monaghan, executive director of Habitat for Humanity Philadelphia, said the students will help the nonprofit provide detailed documentation for Habitat officials to approach foundations and lenders for funding. Habitat will also present the students’ suggestions to its Board of Directors.

“We’re going to have a lot more documentation, and when it comes from a reputable institution like Temple, it’s going to mean a lot more,” Monaghan said.

The students’ conclusion: go for it. The increasingly popular ReStores typically diversify and strengthen income streams. There are more than 650 ReStores operating successfully nationwide, and 100 more are expected to open in the next year.

Through monthly yard sales, and with little marketing, Philadelphia’s Habitat has already netted $20,000 through its small ReStore on 19th and Berks streets, just blocks from Temple’s Main Campus.

For Habitat, an economically sustainable ReStore would serve many goals, including saving usable building supplies and home furnishings from landfills, reaching underserved market segments with affordable goods, providing additional volunteer opportunities and making more money to build more homes.

EMC Managing Director TL Hill and Clinical Professor James Hutchin said the students concluded that Philadelphia’s ReStore would break even in a year and could pay back, if needed, the money raised to launch the venture within three years. During a five-year period, Hutchin estimated, Habitat could build at least 10 houses that otherwise wouldn’t have been built.

Throughout the day, Hutchin said he saw in students “exceptional team skills and quiet competency.”

“A lot of it has to do with the attention they’re giving to working together,” Hill added.

Amid towers of empty pizza boxes and rows of Box of Joe coffee containers, students debated partnership opportunities, inventory software and whether a ReStore receptionist would be overworked. Later, they analyzed everything from the cost of making a sign to the color choice for PowerPoint slides.

“The hardest process is understanding the problem,” MBA student Andrew Martel said. “The biggest difference between class and the real world is that the problems aren’t clearly laid out for you. You have to fall back on the class experiences to get through. When we sat down six hours ago, we didn’t know where to start.”

But Habitat representatives know where students using their expertise for social good should end.

“I would love, in 10 years, for them to be driving in the area, with their kids in the car going to soccer practice, seeing three or four ReStores that we have and saying to their kids, ‘I started that,’” Monaghan said.

– Brandon Lausch