Knowledge at Wharton

Just as computer operating systems vied for dominance back in the late 1970s and early 1980s smartphone makers these days are jostling for market share hoping that their mix of capabilities -- ranging from web surfing to email to calendar management -- will ensure them a critical mass of customers. What the makers of such mobile devices as the BlackBerry iPhone and Treo are trying to avoid is the outcome of that earlier race when one company -- Microsoft -- ended up the dominant player.

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Executive compensation packages that provide huge payouts for short-term stock-market gains have been blamed for playing a role in the risky behavior that triggered the continuing financial crisis. In a new research paper a Wharton professor and several colleagues say they have come up with something better: A compensation structure based on long-term escrow accounts.

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Entrepreneur Elon Musk has three passions: the Internet space exploration and clean energy. The first paid off handsomely for him in 2002 when he sold PayPal to eBay for $1.5 billion in stock. The second is fueled by SpaceX a company that makes space launch vehicles. Musk’s third passion is Tesla Motors which makes the Tesla Roadster an electric sports car that claims to go 244 miles per charge and sells for $101 500 or more. In the first of a two-part interview with Wharton Entrepreneurial Programs and Knowledge at Wharton Musk speaks with management professor John Paul MacDuffie co-director of the International Motor Vehicle Program about electric cars hybrids the Tesla and the mysterious ways of Detroit.

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When Leonard Abess sold a majority stake in Miami-based City National Bank last fall he did something very unusual. He took $60 million of that money and gave it out as bonuses to 399 current bank employees and 72 former employees. He did it without calling in a public relations firm or the media. He didn’t blog about it. And while he was mentioned in President Obama’s inauguration speech and was ABC News Person of the Week these things were not done at his instigation. In fact he wasn’t even on site when the money was given out. He decided to share the wealth he said as a way to reward the people who had helped make the bank successful. Knowledge at Wharton asked Leonard Abess who remains chairman and CEO of the bank to talk about the motivation behind his gift leadership and the current economic crisis.

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Equities are subject to much wider price swings than previously understood according to a recent paper co-authored by Wharton finance and economics professor Robert Stambaugh. The research adds a new perspective to the work of Wharton finance professor Jeremy J. Siegel author of the book Stocks for the Long Run which says stock returns more than offset risks if you stay with the market through its ups and downs. In a recent interview with Knowledge at Wharton the professors described their views about the market’s long-term behavior.

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The world of private equity has been in a shambles since the onset of the financial crisis but some executives see that as an opportunity rather than a threat. Among them is David N. Roberts senior managing director of Angelo Gordon who manages the firm’s private equity business. A 16-year veteran of the firm Roberts also founded the firm’s opportunistic real estate area. During a visit to campus recently Roberts pointed out that while the government’s stimulus programs have not yet had a widespread impact some opportunities are starting to open up that could ease the credit crunch.

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The world may be buzzing about Twitter but will the San Francisco-based messaging service with the high cool factor ever be a money maker? Or will it operate at a perpetual loss as one Wall Street analyst suggested ”until the next cool Web 2.0 social networking concept comes along and Twitter tweets no more.”

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Emotion not only helped lead America into the current economic crisis but may also be helping to keep it there. At a recent conference called ”Crisis of Confidence: The Recession and the Economy of Fear ” sponsored by the University of Pennsylvania’s Department of Psychiatry and the Psychoanalytic Center of Philadelphia an interdisciplinary panel explored the psychology behind today’s economy.

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Perception matters so don’t bring a politician to a union rally in a Datsun. This was one of the lessons Harris Diamond learned during a career that started with selling peanuts in Yankee Stadium. Now CEO of public relations firm Weber Shandwick Worldwide Diamond shared his thoughts on leadership -- and luck -- during a recent Wharton Leadership Lecture.

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Even the biggest tax hikes will not raise enough money to pay off the national debt or meet coming obligations to retiring baby boomers for Medicare and Social Security. To accomplish the latter politicians must do something they fear even more than raising taxes: Reduce Medicare and Social Security benefits. In an interview with Knowledge at Wharton insurance and risk management professor Kent Smetters discussed the impending crisis.

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