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The Strategist’s Challenge: Darden’s First Year Strategy Course and BP

Feb 10th, 2011 by

Yesterday Darden’s first year Strategic Thinking and Action course discussed the case BP-Beyond Petroleum, written in 2010 after the Deepwater Horizon explosion that tragically killed 11 people and led to the largest oil spill1 in the U.S.

BP Case Image

Professors Mike Lenox, Jared Harris, Jeanne Liedtka and Scott Snell, invited students to consider several questions for present-day BP, including:

1. Is renewable energy an attractive market segment for the company?

2. Does it have the internal capabilities to succeed in this market?

What struck me about the discussion was how much it was enriched by the energy-related prior work experience of the students. Points were made by those who had:

1. experienced the dynamics of business-NGO partnerships

2. been involved in financing an ethanol plant

3. covered utility companies as an analyst

4. analyzed a debt deal for a coal plant

5. worked for a solar company for five years

Each of their perspectives helped clarify the challenges and options at hand for BP.

In addition to deploying strategy tools such as Porter’s Five Forces framework and SWOT Analysis, the learning also centered upon conducting a stakeholder2 assessment for BP, i.e. Who are the company’s stakeholders and how would they define success for the company? How might they view investment decisions differently? Stakeholder groups include stockholders for sure, but also employees, the local community, government, media, NGOs and customers. Each has a different “stake” in the game of business and, thus, pressures/motivates business leaders accordingly. The savvy and successful leaders in turn are skilled at addressing the interests of all of these different groups in order to achieve long-term returns for the business – and also for society.

StrategistsChallenge

Ultimately the students’ recommendations for BP’s leadership team were varied, but they agreed on one thing: there is no easy path to profit in the renewable energy sector for BP or any company. However, the leaders that are in touch with the interests of all stakeholders, as well as clear on the strengths of, and threats to their companies, are best positioned to create value in the long run.

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1 For more about BP after the oil spill, check out Darden’s sustainability podcast series: The Darden GreenPod 10: Business Strategy and Crisis Leadership at BP.

2 For leading thinking on stakeholder engagement, read the 2010 book, Stakeholder Theory: The State of the Art, by Darden professors R. Edward Freeman, Andrew Wicks, Bidhan Parmar, and co-authors Jeffrey Harrison and Simone de Colle.

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Darden MBAs Finding Careers for Change

Sep 10th, 2010 by

Career Discovery Forum-Mission_20100818_0006 First year students at Darden begin their job search process as soon as they arrive in August, participating in a series of Career Discovery Forums (CDFs). The CDFs give students a better understanding of post-MBA options in Consulting, Entrepreneurship, Finance, General Management & Operations, Marketing, and Mission-Driven Careers.

The opening presentation for the Mission-Driven Careers Forum was given by Kellogg Leliveld, Associate Director of Business Development for Darden’s Career Development Center. In addition to meeting with companies, Kellogg focuses on finding jobs in a variety of industries, including energy, microfinance, corporate social responsibility (CSR), education, government and non-profits, and also leads the school’s Renewable Energy Job Trek.

Kellogg noted a number of changes during the 2009-2010 school year: Darden posted approximately 120 positions related to sustainability and social change, an increase over 2008-2009; there was an increase in student interest in such roles; and membership in career clubs related to energy, sustainability, education and entrepreneurship has increased. Some students also choose to start their own mission-oriented companies, and have the opportunity to spend a summer (with funding provided) in Darden’s Incubator. Last summer’s Incubator companies included two focused on renewable energy and energy efficiency.

What are mission-driven roles, which can encompass many of the categoriesCareer Discovery Forum-Mission_20100818_0009 mentioned above and more? They look different to different people. One could be an operations role in a traditional company committed to energy efficiency in its supply chain. Or a product design role focused on bringing innovative goods to market that provide environmental solutions (note our GE panelist below). Or perhaps a job in community development finance or a CSR role for a Fortune 100 company. Below is a list of a number of these types of positions. A great resource on this topic is the book Profession and Purpose: A Resource Guide for MBA Careers in Sustainability by Katie Kross.

Mission Driven Careers Slide

A diverse group of panelists shared with students what they do and their enthusiasm for the impact they are having, including:

Career Discovery Forum-Mission_20100818_0014

The message from Kellogg and our panelists was that there are great opportunities for MBAs to focus their careers on addressing the world’s most serious issues such as climate change, education reform, potable water availability, and poverty. And business schools like Darden have the expertise to help guide students on this path.

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Progress on Sustainability at Darden: the 2009-2010 Academic Year

Jul 23rd, 2010 by

In an academic institution like Darden, summer is a good time to reflect. While my office is a little too quiet without students stopping by to talk about sustainability-focused courses, projects and jobs, I welcome the chance to consider progress and lessons learned, and to focus on the coming year.

Just over two years ago our Dean, Robert Bruner, became the first business school Dean we know of to set a business school-specific, aggressive sustainability vision: to be a zero waste, carbon neutral enterprise by 2020 and a top ten business school for teaching and research on sustainability by 2013. Since then, our community has been energized by this vision in the areas of How We Live and How We Learn.

Several people in particular have been instrumental in our progress, including: Terry De Guzman, Associate Dean for Finance and Administration; Keith Crawford, Facilities Administrator; Gene Meoni, General Manager of Hospitality; Tom Cervelloni, Director of Food and Beverage; Kellogg Leliveld, Associate Director of Business Development, Career Development Center; Professor Richard Brownlee (Accounting), Chair of the Dean’s Advisory Committee on Sustainability Curriculum, as well as the other faculty members of this committee, Professors Yiorgos Allayannis (Finance), Andrea Larson (Entrepreneurship) and Michael Lenox (Strategy). Professors Ed Freeman (Ethics) and other Ethics faculty members, Sherwood Frey (Negotiation) and Robert Landel (Operations) also play a key role in designing sustainability curriculum.

What have we accomplished this year?

School Operations-Measurement

In 2009 we established Darden’s Eco-Effectiveness Metrics. These are the key indicators by which we measure ourselves on our zero waste, carbon neutral goal. Simply, they include energy use, water use, and waste production.

Darden Uses the Clean Air Cool Planet Model to Calculate Its Greenhouse Gas Emissions

This summer we will post our current status in these areas on the Sustainability at Darden web site. Every time our community recycles, turns off computers at night, and unplugs items such as cell phone chargers when not in use, we are moving in a small way in the right direction.

School Operations-Energy Efficiency

Approximately 87% of Darden’s carbon footprint is related to purchased electricity from Dominion Power. Since we live in VA, much of that electricity is generated through burning coal, and we do not (yet) have the opportunity to purchase renewable energy such as wind power from Dominion. We believe we can achieve a 25% reduction in our energy use simply through conservation and energy efficiency measures. Toward that end, we recently signed a contract with Aero Integrated Solutions to recommission our HVAC systems to improve performance, with the goal of reducing both energy use and energy costs. Our Sustainability at Darden web site details other specific actions we have taken.

School Operations-Renewable Energy

Production or purchase of renewable energy, along with conservation and energy efficiency, is an essential part of our sustainability strategy. Toward that end, we have met with providers of solar services agreements and fuel cells to assess the feasibility for Darden. While we haven’t signed any contracts yet, we continue to look for options that meet our financial and performance criteria.

School Operations-Waste

On the waste reduction front, since we estimate that half of Darden’s waste is food-related, we’ve investigated several options for composting food waste either on-site or at a local farm. Stay tuned for more progress on that. We have also increased the number of recycling locations, co-located with trash cans for convenience.

MBA Curriculum

Darden continues to integrate sustainability topics into the core, required curriculum as well as to offer approximately twenty elective courses that are fully or partially focused on sustainability topics.

Additionally, students may now choose to enroll in up to two academic concentrations during their second year to deepen their knowledge in areas of particular interest and/or career-focus. Innovation for Sustainability is one such new concentration. The required course is Sustainable Innovation and Entrepreneurship taught by Prof. Andrea Larson. Students also choose from among several electives, including Systems Design and Business Dynamics(Prof. Robert Landel) and Creative Capitalism(Prof. Ed Freeman). Students must also complete an experiential component, whether a business project with a sustainability-focused company, or a Global Business Experience, such as a sustainability-focused trip to visit companies and study at universities in Brazil, Israel or Sweden. Coursework will be supplemented by multi-disciplinary, student-faculty gatherings to synthesize learnings.

Research

Last fall ten schools including Darden launched the Alliance for Research on Corporate Sustainability (ARCS), a consortium that includes Harvard, Yale, Michigan and others. ARCS focuses on providing data and networking opportunities for corporate sustainability researchers. ARCS held its second annual research conference at Harvard

Participants at the 2nd Annual Alliance for Research on Corporate Sustainability Conference (ARCS) Conference

Business School last May. A multi-disciplinary group of 100 corporate sustainability researchers from 54 institutions and ten countries gathered to present and discuss leading papers in the field. Given the urgent need for effective sustainability policies and strategies that can be employed by firms and governments alike, ARCS scholars have an important role to play. Professor Mike Lenox is the Faculty Director of ARCS and I am the Managing Director.

Co-Curricular Activities

This has also been an incredibly busy year for sustainability-related events and competitions. Darden hosted a regional round of the Wal-Mart Better Living Business Plan Competition, as well as the Aspen Institute Business and Society Case Competition. For the former, Darden students Parker Garrett and Ian Shields presented their business plan for Piankatank, a sustainable aquaculture operation without the typical environmental damage and potential health issues associated with fish farming. For the Aspen competition, students had a weekend to grapple with a very challenging case, creating a sustainability strategy for the Tata Group.

This year Darden also hosted the Garden Club of Virginia’s annual Conservation Forum on Sustainable Communities, the Tibet Social Business Conference, and the Sustainability and Renewable Energy Forum. The Sustainability and Renewable Energy Forum, which was primarily organized by students, featured Ray Anderson, Chairman of Interface, Inc. the carpet company which invented the modular carpet tile and developed a process for reclaiming and re-using carpet tiles. (Ray is one of my personal heroes.) A second keynote speaker was Andris Cukurs, CEO of the North American Subsidiary of Suzlon Wind Energy Corporation who also participated in a case discussion on the

Suzlon Wind Energy Executives Visited Darden in Oct. 2009

company in Prof. Richard Brownlee’s Business and Sustainability course. Darden’s Net Impact Chapter also featured a series of great speakers from UPS, GE and others.

Darden Capital Management launched its new fund, the Rotunda Fund, which will give selected students the opportunity to use a sustainability investment strategy to invest the school’s assets and focus on achieving long-term returns. Overseen by Prof. Yiorgos Allayannis, Darden Capital Management also gives academic credit.

Although the past academic year was indeed productive, we have far to go! New collaborations among Darden students, faculty and staff – as well as across the University of Virginia and with external organizations – are essential to our success.

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Impressions from the Solar Decathlon in Washington, DC

Oct 16th, 2009 by

Last weekend I attended the U.S. Department of Energy Solar Decathlon on the National Mall in Washington, DC. This event is a competition among universities to design, construct and operate the most visually appealing and energy-efficient solar home, with the goal of generating awareness about solar technologies and further developing the technology. The homes are built at the universities, which included those in Europe, Canada and Puerto Rico, and then disassembled, transported to D.C. and re-assembled. (The University of Virginia had an award-winning entry in 2002. Hopefully we will be back again at the next one in 2011!)

Exteriors of each home were beautifully landscaped, with vegetation reflecting the natural surroundings of their home institutions. The interior designs were modern and very appealing. The event was well-attended, with attendees cheerfully waiting 30 minutes to get into some houses.

At the Solar Decathlon’s opening ceremony, Secretary of Energy Steven Chu announced that up to $87M in funding has been made available to advance solar energy technologies. Additionally the event, which continues through Sunday, Oct. 18th, featured presentations on topics such as Green Jobs and Solar for the Homeowner.

How does a school like Darden, which has set the goal to be carbon neutral by 2020, take advantage of solar technologies? Many companies such as Sol Sage Energy, Sun Edison, and SunPower allow customers to lease solar panels through a Power Purchase Agreement. The leased panels would allow us to generate power, use what we need, and feed the extra back into the grid without purchasing/owning any of the equipment. Our electricity rates, on a per kilowatt hour (kWh) basis are locked in for the duration of the agreement, which could be ten years. Given that energy prices are rising and difficult to predict, fixing our energy rates could make financial sense.

I was discussing the Solar Decathlon with my colleague at Darden, Professor Peter DeBaere, who teaches in the Global Economies and Markets area. He noted that the U.S. has a great deal of progress to make. We have complex and changing incentives and regulations which differ by state, creating barriers to adoption for residential or commercial users. He compared the U.S. to countries such as Germany, with its popular feed-in tariff that has boosted the use of renewable energy. It is interesting to compare U.S. solar energy adoption with that of wind power, the market penetration of which is growing quickly. According to a U.S. Department of Energy report, 40% of new power generation in the U.S. in 2008 was wind power.

Events like the Solar Decathlon are great fun to attend. Additionally they give researchers and students the funding to refine the technologies they are developing, and deepen popular understanding of the benefits of widespread adoption of solar technologies.

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Learning about Green Building

Sep 4th, 2009 by

Yesterday we hosted at Darden Elizabeth Heider, AIA LEED AP, Senior Vice President at Skanska USA Building Inc. and board member of the U.S. Green Building Council (USGBC). The title of her talk was Green Leadership Evolution: Green Opportunities in Construction. She was also a guest in the first year Decision Analysis class, which discussed a case written by Prof. Casey Lichtendahl on Skanska’s choice to seek Leadership in Energy and Environmental Design (LEED) Platinum certification (or not) for its flagship offices at the Empire State Building.

As Senior Vice President for Skanska, Ms. Heider, a graduate of UVA’s School of Architecture, is responsible for the pre-construction management of multimillion-dollar construction programs. She is helping transform the building industry, which is in great need of change.

Buildings generate an estimated 40% of the world’s carbon emission, making innovation essential. The good news is that the USGBC has experienced explosive growth in the number of LEED certified projects, and in the number of people taking the exam to become LEED accredited professionals. Companies like Skanska help their clients achieve LEED certification, whether through new construction or renovation.

I was particularly interested to learn from Ms. Heider about The Living Building Challenge, a program operated by the Cascadia Region Green Building Council. The characteristics of a “living building” are, for the most part, beyond our grasp now. However, we are charged with achieving “a building designed and constructed to function as elegantly and efficiently as a flower,…informed by its ecoregion’s characteristics, and that generates all of its own energy with renewable resources, captures and treats all of its water, and operates efficiently and for maximum beauty.”

Suppliers to the construction industry are adapting to the demand for sustainable materials but have a long way to go. Organizations like the USGBC and corporate leaders like Ms. Heider are pushing them faster.

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Toward Zero Carbon: Home Remodeling

May 14th, 2009 by

This year we did some decidedly unglamorous home remodeling. No new countertops or cabinets or lighting, as much fun as that would have been. Our big excitement was a new window, a new screen door, supplemental insulation in our attic, and insulated window shades in a bedroom.

Our utility room had been drafty due to an older, leaky window and a screen door that provided no additional insulation for the primary exterior door. We first tried to buy our window and door at the Habitat for Humanity store, which sells used/reclaimed (sometimes even new) doors, windows, wood, environmentally friendly paint, etc. It’s a terrific place that is also a fundraiser for the local Habitat for Humanity. We didn’t have any luck this time. However, we went to a major retailer and asked if they had any returns on custom orders that they wanted to get rid of. Amazingly they did, and (I kid you not) we got a screen door and good quality window for $20! We had to modify the window opening due to the slightly non-standard size, and buy some missing hardware for the screen door, but it was totally worth it. The project was satisfying because now the utility room isn’t so much cooler than the rest of the house, and we have reduced our energy costs and carbon footprint.

Our other project, adding insulation to the attic, was also satisfying because we used cellulose insulation that met our cost, performance and environmental criteria. The insulation is made out of recycled newspapers and feels much safer to work with than the pink fiberglass stuff which once got into my clothes (a very unpleasant experience!) When it snowed recently, I was happy to see that the snow sat on our roof for a week, meaning that heat is being retained in our house and not escaping thru the roof of the attic. This particular insulation is also more fire retardant than the fiberglass material.

I’ll talk more about our insulating window shades next time.

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Getting to Work: Zero Carbon Transportation

Mar 23rd, 2009 by

Part of being a zero carbon family means addressing our transportation patterns. I’m fortunate that I live close enough to walk to work. We like the convenience of living in town, even though for us that means living in a house that is small for a family of four. But I experience a few barriers to walking (of course surmountable with careful planning) to which you can probably relate:

While I have seen my colleagues arrive at work on foot or by bicycle looking elegant in their work clothes, I sometimes feel sweaty when I get here. But I don’t want to cram my suit, toiletries and towel for a shower into my backpack either.

I really need to get home to my children as fast as possible at the end of the day. Walking home takes longer than driving, and I don’t enjoy biking on a busy road in the dark.

Ultimately I have decided to try to walk two times per week, which has the added benefit of providing needed exercise and saving me on parking, since I buy parking by the day. We also bought a 4-stroke engine scooter so that on the non-walking days I can use as little gas as possible and still not have to pay for parking. It’s a start.

Another option you might consider is an electric bike. I test drove the one owned by Professor Jeanne Liedtka and her husband, transportation demand management expert, Randy Salzman. It’s a little heavy but I think it just takes getting used to. I liked that I could pedal when I wanted to, and use the battery power for climbing hills. There is no engine since the battery is powered by energy transfer from braking activity. Using an electric bike is another way to reduce your carbon footprint, get exercise, arrive sooner than you would on foot, and save money on parking.

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Zero Waste, Zero Carbon at Home: First Steps

Mar 23rd, 2009 by

Darden has set the goal to be a zero waste, carbon neutral enterprise by 2020, as well as a top ten school for teaching and research on Sustainability. As Manager of Sustainability Programs, I enjoy guiding the actions our community is taking to achieve our goals.

In parallel, my family, which includes my husband and two young children, is exploring what it takes to be zero waste, zero carbon at home. Sometimes personal habits are easier to change than institutional ones, but the reverse may also be true. We have always recycled and composted, and our sons love to sort the recycling and pick stuff from our little garden. We tried to get our trash company to come every other week since our trash is minimal, but they said no. Nonetheless, we are nowhere close to being zero waste. Things like broken plastic hangers or the liner of the cereal box end up in the landfill. Even when I try to minimize our consumption (“Do I really need that?”), buy used (thanks to Craig’s List and eBay), and make purchases with “the end” in mind, some things do not lend themselves to re-use or recycling.

I’ll be honest with you about my challenges this year, and welcome hearing about your own zero waste, zero carbon journey. Successes and failures are welcome in this discussion. Constructive discourse (suggestions, encouragement, offers of resources, etc.) will help us get there.

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