COURSE CONNECTOR

ARTICLE SUMMARIES AND QUESTIONS

"The 100 Best Companies to Work For: Jim Collins: How Great Companies Turn Crisis Into Opportunity," pp. 48-52: In troubled times, every company is concerned about its future, even those that seem recession-proof. So it’s comforting to know that management guru Jim Collins, author of the business classics Built to Last and Good to Great, has spent the past few years hard at work, alongside partner Morten Hansen, studying how companies navigate through periods of turbulence. His choice of topic couldn't have come at a better time, and he has some advice for all the corporate worrywarts out there. First, companies that survive always have moorings — identifiable values preserved consistently over time that keep the company focused during duress and uncertainty. Second, successful companies never scrimp on talent. They continue to invest smartly in human capital of the highest caliber regardless of the economic environment. Lastly, the companies most likely to prevail are those that plan to prevail. Great companies manage for the quarter century, not just the next quarter. Those companies that make it through the current chaos and come out stronger will do so by striking a perfect balance between acknowledging and dealing with the immediate challenges they face, and believing strongly in their ability to endure and thrive.

Students examine the qualities defined by management expert Jim Collins that can determine whether a company will survive the economic crisis intact.

Discussion Questions:

1. What does Jim Collins say about the nature of present-day economic conditions when considered within a historical context? What can we expect in the short term? The long term?

2. How did Hewlett-Packard and Boeing take difficult circumstances and turn them into opportunities? What lessons can other companies take from these examples?

3. What are the benefits of managing in good times as if they were bad times? How has Southwest Airlines exemplified this credo? To what advantage?

"The 100 Best Companies to Work For: Zappos Knows How to Kick It," pp. 54-60: Las Vegas-based online retailer Zappos may be No. 23 on FORTUNE's 2009 list of the 100 Best Companies to Work For, but it would be a real contender for No. 1 if the primary judging factor was how weird the place is. Parades. Pajama parties. Nerf dart battles. Cowbells. They're all a part of Zappos culture. Indeed, one of CEO Tony Hsieh's Ten Commandments-type core values is "Create fun and a little weirdness." Of course, all customers really care about is the first core value, "Deliver WOW through service," and that's the one that has helped Zappos' sales jump by almost 20% in 2008, passing the $1 billion mark two years ahead of schedule. Hsieh never outsourced his call center because he considers customer service too important, and nobody beats Zappos' shipping policy (free in both directions!). But for all its fun and success, even Zappos couldn’t avoid the harsh realities of the economic downturn, and was recently forced to lay off 124 employees. Remaining true to its employee-nurturing ethos, the company provided extended benefits to departing staffers, a gesture that impressed both those who were leaving and those who stayed.

This article profiles Zappos, a 10-year-old e-commerce site that is the highest-ranking newcomer on FORTUNE'’s 2009 list of the 100 Best Companies to Work For.

Discussion Questions:

1. What benefits do Zappos employees enjoy? Their customers? How does Zappos chairman, COO, and CFO Alfred Lin justify these benefits, financially speaking?

2. How do Zappos' hiring practices ensure that prospective employees are right for the company? What aspects of the Zappos culture have other companies sought to emulate?

3. How have companies like Zappos, Camden Property Trust, and eBay been models of effective management in their approach to downsizing? In what ways are their actions meaningful to employees remaining on staff?

"Madoff Does Minneapolis," pp. 80-86: By now, you've probably heard of Bernie Madoff, the infamous securities broker charged with perpetrating what may very well be the largest investor fraud ever committed by a single person. A slew of wealthy big-wigs and prominent charitable foundations have been hit hard by the scheme, but they're not the only ones. Though they haven't received the press coverage that their fellow fraud victims in tony Manhattan, Palm Beach, Hollywood and Europe have, dozens of families in the upscale communities of the Minneapolis-St. Paul metro area are caught up in the mess as well. Seems Bernie made off with as much as $600 million from the region, particularly from "quiet-money" Jewish investors and foundations. The effects have been devastating — families' college savings and retirement accounts are wiped out, businesses' profit-sharing programs are threatened, and philanthropies are scrambling to pay for basic core missions to support the poor. Worse, leading class-action attorneys studying the case have thus far found no real path to recovering losses for victims. Perhaps if government regulators are shown to have been negligent in uncovering the truth behind Madoff’s operations, the fraud victims may be the next ones in line at the government till.

Students take a closer look at the Bernard Madoff fraud scheme and its heavy impact on the Twin Cities.

Discussion Questions:

1. How did Bernard Madoff infiltrate the Twin Cities? Why did he specifically target the Jewish community? Why did investors trust him?

2. Why is the Minnesota state government concerned about the impact of the Madoff scheme? Explain why a similar Minnesota-based fraud case — the Tom Petters Ponzi scheme — also could pose a dilemma for the fragile local economy.

3. In your opinion, what is the likelihood that Madoff's victims will be able to recoup at least some of their lost investments? What measures of recourse do you believe are most appropriate? Why?

"Russia’s King of Crude," pp. 88-92: Lukoil, Russia’s largest independent company, formed just weeks before the 1991 collapse of the Soviet Union, casts a mirror-image of its homeland right now. Just six months ago, it appeared to be on top of the world. The company had managed to become a global player in the petroleum market and the face of Russian business abroad. Among the world's independent oil companies, it controlled the second-largest reserves, behind Exxon Mobil, and had operations in more than 40 countries. In short, "almost everything was perfect in the whole world," says Lukoil president Vagit Alekperov. "And then this happened." This is the global credit crisis, which took hold in Russia last fall. As the world’s newest energy powerhouse, Russia was initially expected by many to be spared, but when the prices of commodities, including oil, collapsed, so did Russia's economy. Economic growth, which averaged about 7% the past five years, may drop below 2% this year; foreign capital continues to flee; and the threat of large-scale unemployment looms. What is in Lukoil's future? Alekperov envisions major international expansion, as long as it can weather the storm until commodities rebound. The same could be said for Mother Russia itself.

In this article, students read how Vagit Alekperov, president of Lukoil, is guiding the Russian oil and gas giant through a tumultuous year.

Discussion Questions:

1. Why does the author of this article propose that Lukoil may be the oil company best suited to take advantage when oil prices rebound? Do you agree? Explain.

2. How did Lukoil get into financial trouble? What will it take for the company to survive? What factors could threaten its ability to dominate the global oil market?

3. What do you think Lukoil president Vagit Alekperov means when he says, "We are first and foremost a Russian company"? How has being a Russian company been both a blessing and a curse for Lukoil?