Knowledge at Wharton

In 2005 about two years after Autumn Bayles became the first chief information officer at Philadelphia-based Tasty Baking Company a supply chain executive quit the company. ”As a part of my technology work I was very involved with that side of the operation ” said Bayles who was hired to be part of president and CEO Charles Pizzi’s turnaround team. ”I raised my hand and said ’Why don’t you let me do this?’” They did and she succeeded. Volunteering for new responsibilities and continuously growing in your job were two of the suggestions that Bayles now senior vice president strategic operations offered her audience at the recent Wharton Women’s Conference.

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As fallout from the subprime lending crisis continues a number of remedies have been proposed to deal with it. One is legislation to curtail predatory lending which is generally thought to be a factor behind the issuing of so many subprime loans to borrowers with poor credit. What qualifies as predatory lending? And what are the conditions that make it flourish? Wharton finance professors David Musto Philip Bond and Bilge Yilmaz analyze predatory lending in a new paper titled ”Predatory Lending in a Rational World.”

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When former Senator George Mitchell finally released his report on performance-enhancing drugs in Major League Baseball last December many of its conclusions came as no surprise to baseball fans most of whom had heard the allegations of steroid use for years. With fans aware of such egregious behavior why has attendance at games continued to climb? Are baseball’s ”consumers” impervious to ethical lapses?  No say Wharton professors but the case demonstrates how bias competition and a lack of oversight can work together to create an ethically toxic atmosphere -- in any field.

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Approximately 19% of the world’s electricity bill comes from lighting according to Rudy Provoost CEO of Philips Lighting. As such Philips the world’s largest producer of industrial and consumer lighting products has a big role to play in the ongoing transformation from incandescent to solid-state lighting using LED technology. Provoost who until last year was CEO of Philips Consumer Electronics is no stranger to new technologies which he says are ”just a vehicle to respond to needs.” Figuring out what those needs are weeding out needless complexity and innovating with an eye on the bottom line are the keys to growth Provoost says. He recently spoke with Wharton marketing professor George Day and Knowledge at Wharton about the challenges of staying ahead in a rapidly changing industry.

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In the mid-1990s a new C-suite title was born when General Electric CEO Jack Welch dubbed Steve Kerr the company’s ”chief learning officer.” Since then CLOs have sprouted up at major firms in several industries. But what does this new breed of ”learning leaders” bring to the table that traditional human resources departments and employee training programs do not? How does an increased emphasis on learning improve an organization? And do new technologies like distance learning simulations and online portals enhance or impede work-based education? To answer these questions Knowledge at Wharton spoke with Ed Betof former vice president of talent management and CLO at Becton Dickinson and Company who is a senior fellow and academic director of Wharton Executive Education’s Executive Program in Work-Based Learning Leadership; Mike Barger vice president and CLO at JetBlue University; and Ann Schulte  vice president of global learning at MasterCard Worldwide.

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Kristin King and Kate Brubacher are founding members of Liberian Widows Initiative (LWI) an organization to aid women devastated by the Liberian Civil War. LWI provides small business loans and savings accounts to members of the extreme poor -- Liberian refugee women who struggle to feed their families and send their children to school. LWI was an outgrowth of Brubacher’s residence in West Africa during 2004-2005. Brubacher is now at Yale Law School and King is a second year MBA student at Wharton. King and Wharton management professor Keith Weigelt talked to Knowledge at Wharton about the challenges of running a grass-roots microfinance initiative several thousand miles away.

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On Friday February 1 Microsoft announced it was making an unsolicited bid to acquire Yahoo for $44.6 billion in cash and stock a 62% premium over Yahoo’s stock price at the time. Yahoo is officially ”evaluating” the offer and according to reports is talking to other companies as possible suitors. Meanwhile Google seems determined to derail the deal stating that it finds the proposed acquisition ”troubling” and offering to help Yahoo come up with other options. Does the deal make sense and if it goes through how difficult will it be to meld these two giant technology companies into one? Knowledge at Wharton spoke with Wharton management professors Larry Hrebiniak and David Hsu to get their views on Microsoft’s offer.

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On January 29 online auctioneer eBay unveiled plans to revamp the fees it charges sellers reduce fraud and increase the volume of transactions. It’s the first move by CEO-elect John Donahoe who will take over the reins of eBay on March 31 in the wake of long-time CEO Meg Whitman’s announcement that she plans to step down. Donahoe’s mission is to reinvigorate a company that remains dominant in online auctions but is vulnerable to increased competition from both large and small rivals. Wharton faculty and others offer Donahoe a game plan for moving forward.

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Private Equity has passed through a Golden Age but will now spend a year or so in ”purgatory” before entering an even greater period of expansion or ”Platinum Age ” according to David Rubenstein co-founder and managing director of The Carlyle Group the Washington D.C.-based private equity firm with more than $70 billion in assets. In a keynote address at the 14th annual Wharton Private Equity and Venture Capital Conference titled ”Harnessing the Winds of Change ” Rubenstein talked about the effect of the subprime credit crisis on the industry and how ”the private equity world needs to spend much more time letting people know what [we] do to create value.”

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In 2007 mutual funds specializing in non-U.S. stocks returned a fat 16% while funds with diversified holdings in U.S. equities returned just over 6%. In fact the foreign-stock funds have beaten domestic-stock funds over periods of two three five 10 and 15 years. Moreover owning foreign stocks helps a U.S. investor diversify risk by reducing a portfolio’s volatility. Why then does the typical U.S. investor do little more than dabble in foreign stocks? Wharton finance professor Karen Lewis studies this issue in a paper titled ”Is the International Diversification Potential Diminishing for Foreign Equity inside the U.S.?”

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