PLANYC 2030

In an effort to be one of the world’s most recognized schools for business, Yale’s School of Management stuffs its students and faculty into century-old buildings resting upon a rat-warren of basements. That is a distant level of learning atmosphere standards from Harvard Business School’s 33- building campus, which also supports a chapel and health club.

To get up to par on today’s high class collegiate living standards, Yale has plans to build a $180 million structure to help attract and retain students against rival schools. The new allure is designed by Lord Norman Foster, who built London’s “Gherkin” tower, and the building is scheduled to open in 2013.

“You can’t be in a dump if everyone else is in a spectacular building,” Oster said.

Top business schools have a common approach of designing and constructing larger, more complex business campuses to recruit the most elite students and faculty, said Yale finance professor Matthew Spiegel. New learning facilities mean additional space for faculty as well as more classrooms and lecture halls for high-margin education programs that provided essential global cash flow. Additionally, higher capacity schools can also accept more students, who invest up to $80,000 per year in tuition, room and board and other expenses.

Even schools with less capacity are developing new standards in learning atmosphere as well as educational opportunities. A mid-size Michigan university, Ferris State, has begun heavy promotion of its Michigan MBA degrees, along with revamping many facilities around campus.

Business schools are dropping a pretty penny on top architects to create elaborate glass-and-steel structures, targeting all aspects of the campus from study rooms to cafeterias and health clubs.

“The better the experience people have, the better they feel about the place, the more likely it will be that they would support it at some point,” said dean of the University of Michigan’s Ross School of Business, in Ann Arbor, Robert Dolan. As a part of the trend, in 2009 the U of M business school opened a $145 million, 270,000-square foot building to help support their Masters of Business Administration program.

Shortly after the University of Pennsylvania’s Wharton School unveiled its $140 million Jon M. Huntsman Hall in 2002, competing business schools have scrambled to keep pace.

In 2004, the University of Chicago opened its $125 million Harper Center, while Michigan’s building debuted last year. Opening new facilities are Massachusetts Institute of Technology’s Sloan School of Business, in Cambridge, Massachusetts, and Stanford University’s Graduate School of Business, near Palo Alto, California.

Also in the development stages are New York’s Columbia Business School and Northwestern University’s Kellogg School of Management, in Evanston, Illinois. Ramping up their IT capacity for an influx of digital learning needs for their new online MBA courses is Ferris State, in Michigan.

Harvard’s buildings, which started construction in 1927, rest on a beautiful perch along the Charles River across from the rest of the university. Harvard has added more to their campus building investments, such as a glass-and-concrete chapel, housing designed to support 400 visiting executives and a health club.

The new business school building at the University of Chicago is structured around a six-story, glass-and-steel atrium that serves as the school’s “living room” for students. An assistant dean of the school adds that the new social space has helped change the perception that the school of business is a sole destination for book worms enrolled in MBA classes.

“We’re working hard to break that perception,” Kole said. “When you come to campus, you see more activity. It’s a much more positive place to be.”

In fact, applications spiked 30 percent after the first year the University of Chicago put the new building in its marketing, however improved collegiate rankings contributed to the rise as well, she noted.

While the physical condition of a business school is not the most important factor of consideration, “you do consider the facility, you do consider what school will allow you to access the latest technology,” said Ashil Ann, a 26 year old prospective college applicant at New York University’s Stern School of Business and McDonough School of Business at Georgetown University in Washington.

High tuition costs contribute to students’ rising expectations – as well as the increase in size and complexity of the new buildings, said Jonathan Levav, a faculty member at Columbia. Tuition, room and board, as well as other expenses for two years at Columbia Business School cost approximately $168,307. With such high costs of education, along with a growing demand for loan origination, the expectations students have are respectable considerations for colleges everywhere.

While a number of U.S. based universities have made cuts to new construction due to decreasing endowments, business schools, especially those that offer MBA courses, are not as nearly affected from the reductions as other areas of study because of their ability to raise money.

“Graduates of business and law schools are often the wealthiest alumni,” said Ronald Ehrenberg, an economics professor at Cornell University, in Ithaca, New York. “It is easy to raise the funds to build buildings from donors to those schools” he adds.

For the school’s new complex of buildings, Stanford’s school of business was granted $105 million, the largest gift in its history, from the Oregon alumnus who founded Nike Inc., Phil Knight. The Standford business campus, which will require an estimated $350 million, will be named the Knight Management Center in his honor.

Developing new buildings can also provide more room for additional education programs, like those pursuing MBA degrees or executive education, the highly profitable, non-degree programs for business-related employees paid for by their companies.

MIT Sloan’s new building has a learning center solely for executive education, offering a better ambiance than the rest of the school. Currently, many Sloan executive education classes are held off campus.

“It is on campus, it is clearly part of the Sloan school complex and it makes it easier to say ‘yes,” said the school’s the associate dean for executive education Rochelle Weichman.

The innovative offerings are also in an effort to counter the growing popularity of online MBA classes, which have provided many students an extremely convenient alternative to post-secondary education opportunities.

MIT’s building holds offices for 107 faculty members who used to be distributed across five structures throughout the campus. To drive innovative ideas and creative brainstorming, the four new office floors are designed to encourage interaction between professors of different departments, said Lucinda Hill, director of capital projects at Sloan.

The Yale School of Management, founded in 1974, is the youngest business school among the Ivy League, a group of eight U.S. colleges in the Northeast. The school has areas of study in Masters of Information Systems Management as well as many more emerging Master’s programs.

“We want to build a great business school,” Yale President Richard Levin said during an interview. Levin added that he wants the school of business to be on par with Yale’s law and medical schools and “be thought of among the best” in the world.

The faculty at Yale’s business school is now working in almost 200 year old buildings and offices originally intended to be bedrooms. Many classrooms are buried in building constructed in 1961, which first housed Yale’s computer department.

“The current facility doesn’t look and feel like a business school,” Levin said. “I think it does hurt us in attracting students.”

Having more students will allow Yale to assure its programs are fully enrolled and to justify the size of its faculty, Oster said. More students also help with financial forecasting for future, long-term investments.

“You don’t want to be in a position where you have three students in each category because you’ll never get enough recruiters and you won’t get classroom excitement if the electives have too few people in them,” Oster commented. “We don’t have enough students to go around.” 

 

They say everything in Texas is big, and that sure goes for its stature in business.

With the biggest point total in the history of our study, Texas posts a big victory as America’s Top State for Business 2010.

Top Five

Texas reclaims the top spot from last year’s winner, Virginia, which slips to No. 2. Texas was last on top in 2008, and Virginia took the crown in the inaugural year of our study, 2007. That leaves Texas and Virginia dead even in the battle for bragging rights at two wins apiece.

Rounding out the top five are No. 3 Colorado, No. 4  North Carolina, and No. 5 Massachusetts, which makes its first appearance among America’s Top States for Business.

Scoring & Categories

Our fourth annual study of America’s Top States for Business puts all 50 states to the test, measuring them on 40 different metrics in ten key categories of competitiveness. We developed these categories back in 2007 with the help of business groups including the National Association of Manufacturers. And we weight the categories based on how frequently states use them as selling points to attract business. That way, we hold the states to their own standards, and tell you how they measure up.

The categories and weightings, for a total of 2,500 points, are:

    * Cost of Doing Business (450 points)
    * Workforce (350 points)
    * Quality of Life (350 points)
    * Economy (314 points)
    * Transportation & Infrastructure (300 points)
    * Technology & Innovation (250 points)
    * Education (175 points)
    * Business Friendliness (175 points)
    * Access to Capital (50 points)
    * Cost of Living (25 points)

We use publicly available data on the metrics in each category to score the states, and then add up those scores to rank America’s Top States for Business.

2010 Dynamic

Coming out on top is always an accomplishment, and never more so than this year. The national economy is anemic, and state budget pressures are growing across the country. In fact, even top-ranked Texas is struggling to make ends meet. The state faces a Texas-sized, $4.6 billion budget shortfall for fiscal 2011, according to the non-partisan Center on Budget and Policy Priorities. That is more than 12 percent of the state budget.

Add to that a sluggish job market across the country, and even the top states cannot afford to rest easy.

In No. 3 Colorado for example, unemployment in May was a relatively low 8 percent. But KUSA-TV reporter Greg Moss in Denver says the unemployment rate does not tell the full story.

“Although ours is way below the national average, it’s remained pretty flat. So we’re seeing a lot of long-term unemployed,” Moss says.

In runner-up Virginia, which has a built-in cushion of technology and government jobs, particularly in the northern part of the state, the employment picture statewide is somewhat shaky.

“The recession of the past two years has hit manufacturing rather hard,” says reporter Tom Schaad of WAVY-TV. “Here in Hampton Roads, International Paper in Franklin closed a major mill, putting 1,100 people out of work. That’s one example.”

What separates the top states from the rest is their ability to cope with those types of economic stress, offering environments that allow businesses to thrive even in a slowdown.

Texas By The Numbers

Texas powers past the tough times on the strength of its economy—top-ranked in our Economy category four years in a row. The Texas economy is the 15th largest in the world, according to government figures; larger, for example, than all the Scandinavian nations combined.

The Lone Star State is home to 64 Fortune 500 companies, more than any other state, in a wide variety of industries. So while the state’s last win in 2008 came with oil at a record $145 a barrel—a natural tailwind for the largest industry in Texas—the state managed to do even better this year despite the fact that oil is trading at roughly half that price.

Texas has also managed to avoid the worst of the real estate crisis, according to reporter Ashanti Blaize of KXAS-TV. “While in other major cities we’ve seen condo high-rise projects either slowed or come to a screeching halt, in Dallas we’ve seen an influx of some of those projects,” says Blake.

However, that economic strength has a side effect. Rising commercial rents and high wages hurt the state in the all-important Cost-of-Doing-Business category, where it comes in at number 30.

Virginia Still Impresses

Virginia comes in second overall this year, but the Old Dominion State still has plenty for which to be proud.

In the Business Friendliness category, which measures the states’ legal and regulatory climates, Virginia is second only to neighboring Delaware. And Virginia offers a diverse economy, making it chock-full of business opportunities, from imports and exports to government contracts in the state that is home to the Pentagon.

“Hampton Roads has the third largest port in the country. That, along with heavy military presence usually provides for a stable economy,” says WAVY-TV’s Schaad, who also notes that federal stimulus money, particularly in the area outside Washington, D.C., is keeping overall unemployment well below the national average.

But with pockets of severe joblessness hampering growth—including in tourism-dependent Williamsburg—Virginia dropped four places to number 11 in the “Economy” category. Virginia also lost critical points in the “Education” category, dropping six places to number 13 as class sizes rose and school spending fell.

While Texas and Virginia duke it out for the top spot year after year and Colorado stays consistent at No. 3, the rest of the rankings are less predictable.

Carolina Comeback

North Carolina, which finished a disappointing ninth in 2009, jumped to No. 4 in 2010. The corporate home of a number of giant financial institutions, including Bank of America and BB&T, North Carolina’s business climate and Raleigh real estate benefited from the easing of the financial crisis, according to WCNC-TV’s Jeff Campbell in Charlotte.

“There are also lessons the state has learned from the recent crisis, and that’s really helping the state diversify towards some other industries like clean energy and tourism,” says Campbell.

As a result, North Carolina has seen a surge of investment, pushing the state to number 10 in our Access to Capital category, up from number 36 last year. That was enough to propel the Tar Heel State back into the top five overall for the first time since 2007.

Massachusetts Moves Up

Massachusetts never ranked among America’s Top States for Business before 2010. Its ranking this year also marks the first time a northeastern state has finished among the top five.

But the Bay State has always been a contender—it finished No. 8 overall last year. Massachusetts’ greatest strength is its schools. The state boasts the best performing K-12 schools in the country, as well as some of the top universities in the world, placing it at the top in the Education category.

The strong education system helps Massachusetts capture near top rankings in Technology & Innovation (number three, up from number five last year) and Access to Capital (number two for the second year in a row). Even in Business Friendliness—not generally considered a hallmark of New England states—Massachusetts finishes a respectable 14th.

Notable Mention

This year’s most improved state is Pennsylvania, which jumped a whopping 13 places to No. 20 overall, from number 33 last year. However, it is unclear whether the Keystone State truly bettered itself, or if others simply got that much worse. Pennsylvania’s best category was Economy, where the state improved to number 15 compared to a 37th place ranking in 2009. Yet the state still faces persistent unemployment and a $4.1 billion state budget shortfall.

The biggest drop came in Vermont, which fell seven places overall to No. 37. While economic conditions have improved in the Green Mountain State, business costs have gone up and the quality of the workforce has declined according to our study.

Two states drop out of the top five in 2010.

Iowa falls to No. 6 from No. 4 last year, and Utah, a consistent player in previous years, moves into a tie for eighth place with Minnesota.

Our study scores all 50 states, so if there are going to be Top States, it stands to reason that there will also be bottom states. Alaska is America’s bottom state for business again this year, hampered by its high cost of living, relatively high cost of doing business, and a weak infrastructure.

After Alaska, there is a big change among the also-rans. Rhode Island drops to No. 49 overall, following its 48th place finish in 2009. The Ocean State is among the least friendly to business, and ties with Nevada for the worst overall economy.

Rhode Island’s drop is good news for those other islands—Hawaii, which climbs to 48th place overall. No great surprise, the Aloha State is number one for Quality of Life. Unfortunately, you get what you pay for. Hawaii ties with California as the most expensive state in which to live, and is second only to New York in the cost of doing business.

 

Sam’s Club said Tuesday it will offer small business loans of up to $25,000 to its small business members.

The division of Wal-Mart Stores Inc., which is based in Bentonville, Ark., is testing a program with Superior Financial Group, one of 13 federally licensed nonbank lenders, and will offer $5,000 to $25,000 loans to members who qualify.

Sam’s Club says 15 percent of its business members reported they were denied a loan in a November survey. That’s up from 12 percent in April 2009.

The program will focus on minority-, women- and veteran-owned businesses.

Sam’s Club members who apply for a small business loan during the pilot will receive $100 off the application fee, a 20 percent discount and a discount on interest rates.

Businesses can pay $35 for a membership to Sam’s Club that includes three annual membership cards that allow them to shop at 600 Sam’s Clubs in the U.S. Sam’s Club offers other memberships to consumers and businesses that cost as much as $100 annually depending on the features included.

Although the economy has grown for three straight quarters, tight credit remains a problem for many consumers and businesses.

“Access to capital is a major pain point for our members,” said Catherine Corley, vice president, membership at Sam’s Club.

Q: Can I just suggest that small business owners avoid the hard sell? Nothing turns me off like that.— Camille

A: I couldn’t agree with you more. We have all come across the hard sell business and salesman. Sometimes it works and sometimes it does not, and often it completely backfires. Case in point: For Mother’s Day my daughters and I went shopping in a tea store in a nearby mall. Rather than entering the Zen-like atmosphere one would expect, it was if we entered Glengarry Glen Ross.

You recall that great film from the 90s, don’t you? Originally a David Mamet play, the movie depicts a couple of days in the lives of some real estate salesmen. The corporate office sends in Alec Baldwin (definitely in his pre-Jack Donaghy days) and he has a peculiar motivational technique: He announces that everyone except the top two salesmen will be fired in the next week. Not surprisingly, the salesmen resort to heavy-handed, dishonest, and hard-sell tactics to get sales and save their jobs.

Well, that is what my daughter and I seemingly walked into in the tea shop. It was the boiler room of Earl Grey! No, that sampler is not good enough, the $100 one is what you want! That tea you just chose will “spoil” in 10 days if you don’t buy this $40 tin to put it in! It was a strange experience, and yes, we left without purchasing a thing. But plenty of others remained.

It’s actually easy to see why a manager would push hard-sell tactics on his or her minions: It’s easy and can get short-term results. Fear is a mighty motivator and instilling it in one’s sales staff can ensure that sales will get done.

But in actuality it is a very shortsighted strategy. Consider all of the downsides to the hard sell:

•Poorer quality sales:  When you force someone into buying something they may not really want, what you are really doing is setting the business up for failure. What often happens is that later, when the pressure is off and customers consider the interaction and the products they purchased, they decide that they do not really want or like the product. They will return it or even cancel their credit card authorization. What the company is left with then is a faux-sale and a disgruntled customer.

•Disgruntled customers:  Indeed, this is potentially an even worse problem. Customers who get products or services crammed down their throat don’t usually stay customers for long. Feeling used and abused, they rightfully take their money elsewhere.

•Unhappy employees:  The parade of bad outcomes keeps on coming. Aside from fake sales and unhappy customers, forcing the hard sell strategy on your staff often leads to low morale and high turnover.

People will only work in a high-pressure sales environment for a few reasons:

• They really need the job
• They like the money
• They thrive under pressure

Most people however, when forced to sell something they do not believe in, or sell something to people who are only marginally interested, will look for a new job that is not so morally compromising.

•Bad morale:  Between the high turnover rate, and selling stuff in questionable ways, the overall staff mood at the hard-sell workplace is typically very poor. Employees in such places don’t believe in the company or the product and they often conspire against management, whom they perceive to be the enemy. This all in turn creates:

•A bad brand: It is hard to create a positive brand and stellar reputation when your employees don’t like you and your customers resent you.

So please, do us all a favor and avoid the hard sell.

Today’s Tip:  Here’s a nice offer: Capital One just announced the launch of Venture for Business, a premium rewards credit card offering small business owners double miles on every purchase. You get 5,000 miles for signing up and these double miles can be redeemed for travel (air fare, hotel room, rental car, etc.) cash back, gift cards, merchandise or charitable donations.

 

 

For Greg Knight, a machinery company executive, being on the road is a key part of doing business. But in the last year, he and his colleagues have pondered every trip and asked: Would it be worth it?

“We really needed to look at, is this trip the difference between closing business?” says Knight, a vice president with AMT Machine Systems in Columbus, Ohio. “Is this necessary for some reason?”

Sometimes the company’s employees would decide that a phone call or e-mail would do. “But … there are times when nothing works as well as sitting in front of someone talking to them,” he says. “We really rely on our people to be the best judge of when that is the case.”

Companies are sending more of their workers back on the road this year after having slashed travel budgets and halted trips to save money during the recession. But even as the economy slowly rebounds, many business analysts and advisers say businesses will continue to carefully weigh when travel is necessary and when it makes more financial sense to have a staff member stay put and connect with a client or colleague by video screen or conference call.

“Right now, the focus for our members is looking at whether that trip brings value back to the company,” says Megan Costello, executive director of the Association of Corporate Travel Executives, whose membership comprises the people in companies who oversee travel. “There’s a shift, a new way of doing things that I don’t think will go away.”

To make that first sales call, launch a product or close a deal, corporate travel experts such as Costello say businesses will probably decide a staff member needs to travel and see a client face-to-face.

But internal meetings are increasingly taking place through video conferences or webcasts.

American Express Business Travel has consultants who will talk with clients about whether a trip is essential and what alternatives could be effective. A growing number of companies are using online tools to quiz would-be travelers on the purpose of their trips and sometimes suggest that they consider a virtual meeting instead.

“I have never seen as much analysis going into decisions with regard to travel,” says Carol Ann Salcito, a travel management consultant to corporations who is based in Norwalk, Conn.

Competition can spur travel

Business travel dropped precipitously last year. The U.S. Travel Association says roughly $215 billion was spent on business travel in 2009, down from $244 billion in 2008.

The travel industry predicts an uptick this year. There was a 1.5% increase in spending on travel and entertainment during the first quarter of 2010 compared with that period last year, says Mike McCormick, executive director of the National Business Travel Association, or NBTA, and a 2.8% increase during the first quarter of 2010 over the fourth quarter of 2009.

And that travel can spur more — for competitive reasons.

“The stabilizing and growing economy puts companies, competitors, back out on the road — especially the sales departments,” says Kevin Mitchell of the Business Travel Coalition. “So you can’t really sit back like you were able to comfortably do through most of 2009, comforted in the knowledge that most of your competitors were scaling travel way back as well.”

Some business-travel analysts say that for businesses to profit and grow, travel is essential. An NBTA study conducted by IHS Global Insight determined that for every dollar spent on corporate travel, the average business would see $15 in profits.

“The only way to grow sales is to go out and get them,” McCormick says. “All it takes is for (a company) to lose that piece of business because their competitor showed up and they didn’t, and they’re back on the road.”

Ultimately when evaluating whether to hit the road, corporate travel experts say, companies are trying to figure if the potential for revenue in the near future or down the line is greater than the cost of the trip.

Such decisions are often as much art as science. They depend on many factors, including a company’s priorities, the service or product it’s selling, and the status of a particular client relationship and transaction.

“It’s very much down to individual companies and what they prioritize,” says Eric Bausman, of Carlson Wagonlit Travel, a global firm that helps companies manage corporate travel programs. “Typically … those initial introductory meetings, the very first sales calls until you make the sale, those are the ones you really target for being in the room with the customer.”

Once a relationship is established, Bausman says, a business might consider visiting the client less frequently, supplementing “those trips with virtual meetings: cellphone calls, Web meetings and video conferences.”

Giving technology a try

The economic downturn has compelled many businesses to consider or better utilize virtual meeting technology, corporate travel experts say.

Options include telephone conference calls, streaming a meeting via the Internet, or telepresencing, in which large screens can make meeting participants in another part of the world appear to be practically sitting across the conference table.

The Association of Corporate Travel Executives says the percentage of its members who were “seriously looking” into using videoconferencing rose from 21% in 2007 to 81% in 2009.

The cost of communication technology has dropped and quality has improved, industry analysts say.

Costello says it’s increasingly being used by companies to cut down on internal meetings that would require travel — trips that many of the association’s members said were using up to 40% of the corporate travel budget but not producing revenue.

An American Express Business Travel survey conducted in January found 74% of respondents said they use or plan to use audio conferencing as an alternative to travel, while 71.6% were using or planned to use Web-based online conferencing or videoconferencing as an option.

“In the vast majority of our client discussions … in terms of new enhancements with our program or areas of interest they’d like us to explore, virtual meetings are always at the top of the list,” says Issa Jouaneh, a vice president at American Express Business Travel.

American Express Business Travel launched its virtual-meeting expert service in August. Consultants work with a client considering a corporate trip, asking about the meeting’s goals and such things as the number of people who would attend. Based on the answers, they advise whether a virtual meeting might be more efficient.

Many businesses are also using corporate online booking tools to help would-be road warriors decide whether to go or stay.

GetThere — a business unit of Sabre Travel network, which provides such a tool — says that last year many companies moved the question asking about the purpose of the trip from the end of the booking process to the beginning.

Depending on the reason you give — “training,” for example, or “customer visit” — a message is triggered as to whether to consider an alternative such as a Web conference or if you’ll need to get approval for the trip.

Of GetThere’s more than 3,000 clients, the number using dynamic messaging — which also advises on preferred suppliers if you are going to take the trip — more than doubled last year.

Eventually, says Chris Kroeger, GetThere’s president, the booking tool could calculate which way to go.

But even if the dollar figures say a teleconference is the way to go, Kroeger says, the person involved should be able to say if the meeting is best done face-to-face.

When only a meeting will do

Although some advisers expect some business trips will be replaced by technology, they say technology won’t become a wholesale substitute for meeting in-person.

“It’s not that we’re going to suddenly switch from all meetings face-to-face to all by virtue of technology,” says John Millikin, who teaches strategy and human resources management at Arizona State University. “You may have a rise in the use of technology to supplement face-to-face meetings so that you are getting a little bit of the best of two worlds.”

Last year, Knight, the machinery company executive from Columbus, says his business trips were reduced by at least 25%. He adds that his company has used videoconferencing for some training and is exploring using it for other purposes as well.

Still, he says, “I just don’t believe you can exactly boil it down to: ‘Here are guidelines. Either you can close business with this trip or there’s no trip.’ I think that’s a mistake.”

The impact of each trip has to be examined, Knight says.

“There are certain places where it’s obvious I need to go,” he says. “Sometimes that’s to hold a hand. Sometimes it’s to help them understand a concept on a project that you’re just not getting through by e-mail or phone or documents.”

For some businesses, there are no complex calculations to make.

Earl Quenzel, who with his wife has an advertising and Web marketing agency in Fort Myers, Fla., says that during the depths of the recession, they took pay cuts and reduced their fees.

But they refused to cut travel. And he’s not about to start now.

“If a customer wants to see you, you go,” Quenzel says. “If you even think the customer might want to see you or could use a little TLC, you go see them. And the same with a prospect. … You don’t cut the things that involve (serving) your clients or winning new business. It’s just stupid.”