In a New Year’s message, Dean Mark Taylor expresses his gratitude to the students, faculty, staff, alumni and friends who all contribute to making WashU Olin an extraordinary place.
“The new year is a time to reflect on where we’ve been and where we’re going. For my part, I’m very proud of the remarkable creativity and resilience we’ve shown over the past two years. I have complete confidence we will, as a collaborative community, meet and overcome whatever challenges this year may bring, and we’ll continue to grow stronger in every way.”
At Olin, we have complete confidence that we will, as a collaborative community, meet and overcome whatever challenges this year may bring, and we’ll continue to grow stronger in every way.
Todd Gormley, area chair of the faculty for finance, and Dean Mark P. Taylor shared this update to the WashU Olin community.
We are writing to let you know that Tim Solberg has been appointed as the academic director for the business of the arts minor at WashU Olin. The business of the arts minor integrates specialized coursework, experiential learning and rich networking opportunities for undergraduate students looking to gain a deeper understanding of how business principles apply to a range of arts-related fields.
Launched in 2018, the program offers students a framework of business, financial, marketing and strategic approaches for managing a career out of their artistic pursuits.
Tim joined the Olin faculty in 2018. He is a professor of practice in finance as well as the academic director of the corporate finance and investments platform. He will lead the business of the arts minor program in opportunities that engage faculty, students, alumni, and community members.
The minor launched with a generous donation from Richard Ritholz, BSBA ’84, his wife Linda, who expressed a commitment to challenging students to practice their artistic endeavors with rigor and business savvy. The Ritholz’s donation is targeting the creation of new courses, experiential learning opportunities in the arts, scholarship funding and internship stipends, and paying for faculty members to teach and publicize the program.
“I am excited to be the academic director of the business of the arts program. I have always had a deep commitment to the arts, whether performing or design, or literature,” Tim said.
“We are designing a program that will have on-site experiential learning with fashion and garment design and creation, gallerists and museum managers, theater and media producers to learn the backstage operations methods. With my teaching experience in arts management at the premier arts and media management school in Chicago, Columbia College, and my own musical education, I am eager to mix finance and management with the arts and provide a hands-on experience for the students.”
In addition to his background in the arts, Tim has worked 30 years in finance, including as a corporate banker and investment advisor for endowment and foundation trustees on their asset allocation and spending policies.
Nonprofit organizations supply resources to people in need, and they’re critical for advancing the United Nation’s Sustainable Development Goals. Food banks, blood banks and humanitarian relief organizations all rely on donations.
But not all nonprofits want or need certain donations, especially if they don’t have space for them or the donations are in bad shape. Still, many nonprofits go ahead and take unwanted donations, and that can pose operational costs for the nonprofits or their partners downstream. The costs can be staggering: In 2018, Australian charities spent $13 million to dispose of unwanted clothing donations.
All is not lost, though. New research suggests strategies for how nonprofits can handle the issue of unwanted donations.
Daniels
Olin’s Kaitlin Daniels, assistant professor of supply chain, operations and technology, wanted to understand the repercussions of rejecting donations. Since donors’ behavior after a rejection is not well understood, nonprofits’ strategies vary widely. For example, a survey of food banks found that 15% of them banned certain low-nutrition items, while nearly half had no nutritional guidelines or policies. Even among the food banks with nutritional guidelines, 40% reported uncertainty about how to handle unwanted donations.
A nonprofit, of course, can reject unwanted donations to control its inventory and to relieve itself and its partners of sorting, storage and disposal costs. But many nonprofits hesitate to reject unwanted donations for fear of alienating donors who might otherwise contribute helpful donations in the future. The consequences are real: Blood donors whose donations were rejected were found to be 29% less likely to donate again within 4.25 years than donors whose blood was accepted.
Daniels studied how donors respond to rejection—and how nonprofits could minimize repercussions afterward. What should organizations do with unwanted donations? “To even begin to answer that question, you need to know how the donors will respond to being turned away,” Daniels said.
Donors’ responses to rejection
In their research, Daniels and coauthor León Valdés at the University of Pittsburgh were, to the best of their knowledge, the first to conduct a controlled laboratory experiment to study donors’ responses to rejection and also the first to find evidence of donors’ self-serving bias, which refers to the tendency to conflate what is fair with what benefits oneself.
Subjects participated in a repeated game in which they decided whether to perform a real-time typing task that could generate a donation to a nonprofit of their choice.
Daniels and Valdés called this version of the experiment the “donation condition.” The subjects had to repeatedly choose whether to complete the typing task that generated a donation, which was then rejected with a probability that was unknown to the subjects.
Daniels and Valdés measured the subjects’ decisions, and they measured the subjects’ beliefs about the probability that their future donations would be accepted.
They then compared those measures against a for-profit experiment: In that, the subjects themselves received a payment generated by a task. The coauthors called this part of the experiment the “reward condition.”
Their work offers two main results.
First, they pinpointed something important about donors’ decision-making: After rejection, they were less optimistic about their chances of successfully donating again, causing their number of instances of completing the typing task (hence, donations) to fall.
Second, they identify that donors are actually biased in a self-serving way: When a lot of effort was required of them to make a donation, their beliefs about if they would be successful were more negative after their efforts were rejected in the donation condition than they were in the reward condition, the authors write in “Trying and Failing: Biases in Donor Aversion to Rejection,” published in Production and Operations Management.
This result uncovers an obstacle to managing inventory that is particularly acute, and it affirms the tension nonprofits feel, Daniels said: “Rejecting donors can negatively impact future donations, especially since a rejected donation can be used in a biased manner to excuse failure to donate in the future.”
Steps nonprofits can take
This finding is of practical use to nonprofit organizations, “serving as both a caution and a guide,” Daniels said.
“On the one hand, NPOs [nonprofit organizations] are particularly vulnerable to backlash over rejections. On the other hand, our results highlight a source of this backlash, which offers NPOs an opportunity to design their processes to try to mitigate it.”
The authors propose two concrete steps nonprofits can take:
Reduce the effort required to make a donation. This can increase overall donations and reduce donors’ self-serving bias, Daniels said.
Use interventions the researchers designed to dispel negative feelings. “We show that offering rejected donors the opportunity to make a small monetary contribution mitigates biased response to rejection,” Daniels said. Nonprofits may achieve similar results by offering other alternatives such as joining the nonprofit’s mailing list or supporting the nonprofit on social media.
Daniels became interested in the topic of rejected donations during an earlier conversation with Valdés about blood donations after the September 11, 2001, terrorist attacks. The surge in blood donations after the attacks helped replenish the nation’s blood supply. But blood bank officials also had a problem on their hands.
Said Daniels: “The upshot of this outpouring of generosity was that the national network of blood supply was replenished, but really there was way more blood than was needed and almost a fifth of donations were discarded.”
Daniels hopes that their behavioral study of donors’ response to rejection can contribute to further research in this area. Understanding, and mitigating, how donors react to information about unwanted donations can help nonprofits continue their critical contribution to the UN’s Sustainable Development Goals.
“They can provide goods that are actually needed by recipients, and at the same time ensure that waste is truly reduced—not transferred to downstream partners in the donations’ supply chain.”
Following the expiration of Major League Baseball’s collective bargaining agreement at 11:59 p.m. ET Wednesday, Dec. 1, team owners announced a lockout of the players. It is the league’s first work stoppage in nearly three decades.
What does that mean for the 2022 season? What do team owners and players stand to lose?
Rishe
“It is hard to imagine a scenario where the current standoff between baseball owners and players would lead to lost games in 2022,” said Patrick Rishe, director of the Sports Business Program at Washington University’s Olin Business School and professor of practice in sports business.
According to Rishe, the pandemic-induced economic losses sustained by MLB teams during the 2020 and 2021 seasons add incentive to reach an agreement before the start of the 2022 season.
“Of course, that’s assuming that acrimony and egos don’t get in the way, which at times in baseball’s history would be deemed a heroic assumption,” Rishe said.
Baseball in December?
According to Rishe, to initiate a lockout with over three months before the start of the 2022 season is, in some respects, “much ado about nothing.”
“In any type of negotiation, real deadlines spur action. The recent settlement between the City of St. Louis and the Rams/NFL are evidence of this, as is the 2011 NFL season where players were locked out from March until August without regular-season games lost,” he said.
“As such, I suspect this lockout will get resolved between late February and mid-March.”
However, Rishe noted that the NBA lockout of 2011 and the NHL lockout of 2012 did cost those leagues games. “But those standoffs didn’t occur in the immediate aftermath of a global pandemic, giving me confidence smarter minds and cooler heads will prevail in MLB before games are lost in 2022,” he said.
No-win situation
From a public relations perspective, however, baseball has already lost.
“Baseball has fallen from being America’s pastime to a sport that feels past its time with younger generations of fans,” Rishe said. “It is now only the third most popular sports league in America behind the NFL and NBA.
“Games are too long, the style of play too dull and slow. Players and teams still lag behind their NFL and NBA peers in encouraging individualism through social media to help market the sport among younger fans.”
Rishe offered the following advice to team owners and players:
“It is crucial during these labor negotiations that both sides show discipline to not get the media involved to sway public sentiment, because if both sides spew the same public vitriol toward each other as they did when trying to return to play during the 2020 pandemic, this would only further amplify fan resentment and reticence to re-engage in 2022.”
It’s common knowledge that holiday shopping is going to be challenging this year due to the broken supply chain. Many favorite items — like game consoles, toys, clothing and shoes — will be in short supply. And if you’re lucky enough to find the hottest toy on your child’s wish list, you will likely pay more for it. But what does the new year hold? Will 2022 be better?
Kouvelis
The answer is maybe, but not right away, according to Panos Kouvelis, director of The Boeing Center for Supply Chain Innovation at Washington University in St. Louis.
His most recent prediction is a little more optimistic. According to Kouvelis, supply chain issues — including product scarcity and logistical bottlenecks — will continue through mid-2022. The automotive industry will not fully recover before 2023. His prediction is based on several factors, including:
Corporate hoarding: Kouvelis believes that some of the orders currently bogging down systems are the result of corporate hoarding. Faced with long shipping times and fears of rationing, companies place extra orders in hope they’ll get the product and materials they need. Many larger companies with more resources have built up warehouses stocked with excess inventory, and some of their incoming inventory is waiting on large vessels trying to clear ports. These phantom and excess orders add pressure to an already vulnerable system, but he believes buyers will ease up in the coming months as logistical delays improve. “After a while, we realized our basement had a limit on how much toilet paper it can hold. The same is true for warehouse space,” Kouvelis said.
The Chinese New Year: Chinese factories and ports will slow down for two weeks in early February, adding extra pressure on the supply chain.
Los Angeles and Long Beach, California, ports have moved to 24/7 operations: In October, President Joe Biden, along with business, port and union leaders, announced a plan to strengthen the resiliency of supply chains by moving toward 24/7 operations at these ports. Increased port operations, along with increased trucking and rail capacity, will help reduce the load that has built up at the ports. However, the shortage of truckers will delay the port recovery.
Return to normal factory operations in Vietnam, Malaysia and Thailand: These countries, which produce the majority of garments, shoes and toys in the U.S., were hit especially hard by the delta variant this summer, causing factories to reduce or even stop operations. The situation is improving, but the increase in production will not reach the U.S. until after the holidays.
“We’re hoping that within the first six months of 2022, the port situation and efforts to increase capacity, both on the railroad and trucking, will improve substantially. If that happens and the demand on the system lessens, things will look better by summer,” Kouvelis said
Could trouble be lurking?
There’s one factor that could derail Kouvelis’ prediction, though: China’s energy crisis. Currently, rising costs have forced Chinese energy companies — that until recently could not raise energy prices due to government-enforced caps — to place restrictions on heavy manufacturing customers. As a result, manufacturers were forced to cut operations by as much as 40%. It doesn’t take long for these shutdowns to impact the quantity of products coming to the U.S. Now, the government has removed energy price caps for manufacturers — especially those that produce cement, steel and paper — but that means the cost will be passed on to consumers, Kouvelis explained.
“The story that I’m not sure how it’s going to play out is the energy crisis in China,” Kouvelis said. “The energy crisis could resolve itself in the next month or two. But if China has an especially cold winter and energy demands remain high, they’ll have to cut capacity further.
“If that happens, 2022 will be driven by that crisis and the constraints that it creates.”
According to Kouvelis, the effects of China’s energy crisis have not yet made its way to the U.S. due to the backup of products on ships outside the U.S. However, within the next month, American consumers will notice greater product shortages and higher prices.
What is the U.S. government doing to address these challenges?
“The government policies will be very important in addressing the long-term misuses of supply chain,” said Kouvelis. who also is the Emerson Distinguished Professor of Operations and Manufacturing Management at Olin Business School. “The government is on the right track, but these problems cannot be resolved within a month or even six months.”
In addition to opening ports for 24/7 operations, Congress recently approved the $1 trillion infrastructure plan that will fund improvements for the nation’s roads, bridges, ports, rail transit, power grid and more, which will ultimately help the supply chain for years to come.
According to Kouvelis, the government also is rethinking trade policies and tariffs with Europe that have created flow constraints. The trade situation with China has more political risks and could continue to impact trade in the future, though.
“Among the risks to consider is the role that climate change and carbon emissions negotiations might play out between the U.S. and China, with the potential that quotas and tariffs be later tied with emission reduction requests,” Kouvelis said. “The Xinjiang forced Uyghur labor situation is a sensitive point, and so far had negative sales implications for Western companies that took a position on it, like H&M and Adidas. And Taiwan’s sovereignty, with its tremendous importance for semiconductor capacity, will remain a ghost in all future trade talks.”
How will this crisis shape future supply chains, U.S. policy?
“The tremendous dependency of critical U.S. supply chains like drugs, batteries and semiconductors to long Asian-based producers and suppliers has become a vulnerability visible to all after the recent pandemic-related supply chain mess. This has been brewing for decades,” Kouvelis said.
Since the ’90s, the U.S. and other developed countries have become increasingly reliant on global supply chains to source cheap labor and materials and keep prices down. When the World Trade Organization accepted China in early 2000 into the organization, the expectation was that the free flow of goods coming from Asia would benefit all economies, he said.
“That story held up to an extent until the pandemic, when the logistics broke down and the Chinese government was controlling what products left the country and we didn’t have access to critical PPE,” Kouvelis said.
That’s led to the realization that more regional supply chains are needed, especially for critical items. While not everything will be produced in the U.S., American companies will increasingly look to source materials from neighboring countries such as Canada and Mexico, he said.
“Some of the microprocessors — probably the low-end microprocessors — will come from Asia, but the more critical components will either be made in Europe or the U.S.,” Kouvelis said.
“The same is true for pharmaceuticals. Right now, most of the critical components are coming from China and India. Expect the government to invest in our pharmaceutical manufacturing capacity.”
Of course, the U.S. is not alone in its supply chain struggles. Europe, parts of Asia and Australia are all experiencing similar supply chain disruptions. The situation is even worse in the U.K. because of Brexit, Kouvelis said.
While no one knows for sure how or when supply chains will be fully operational, Kouvelis said this is for certain: The experience of the last two years will shape supply chain planning and operations for years to come.
Ohad Kadan, who began his academic career in 2002 as an assistant professor at WashU Olin and spent nearly 20 years rising through its ranks as an instructor, academic and researcher, will become dean of the WP Carey School of Business at Arizona State University on July 1.
“It is truly bittersweet to me,” said Kadan after the announcement was made last week. “I have spent my entire academic career here at Olin, and it will be difficult to leave.”
In an email after the announcement to WashU Olin’s staff, faculty and students, Dean Mark P. Taylor acknowledged the recognition of Kadan’s talent as an academic and purpose-driven leader.
“I am, of course, thrilled for the opportunity that awaits him,” Taylor wrote. “But at the same time, I’m quite sad to lose a valued colleague who has had a staggering impact across every part of the Olin community.”
Fresh opportunity
In its announcement on November 15, the business school based in Tempe, Arizona, noted that Kadan’s appointment culminated a national search to fill the post.
The school’s announcement said he would join at a “crucial period for higher education,” and went on to quote Kadan: “WP Carey prides itself on channeling ASU’s spirit of innovation and rethinking what’s next in business education. I am excited to lead the school into emerging areas, while never losing sight of our commitment to student success and cutting-edge research.”
Kadan said the opportunity represented a stark change in direction after 20 years at the same institution, but it was an exciting opportunity to put into practice what he’d learned in that time. Additionally, he noted that his children were growing up and he and his wife were eager to explore new paths as they moved toward becoming empty-nesters.
The ASU business school serves more than 17,000 students across undergraduate programs in more than 30 disciplines as well as a range of graduate and doctoral programs.
Impact across Olin
Kadan leaves with two prominent titles at WashU Olin: vice dean for education and globalization and H. Frederick Hagemann Jr. Professor of Finance. Those positions capped his rise from assistant professor. During his ascent, he also served as area chair for finance. On the way, he assembled a distinguished record of published research, and his commitment to teaching at the highest level earned him Olin’s Reid Teaching Award.
As vice dean, Ohad has partnered with colleagues in every program, every center and across every student and alumni population. His partnership helped to drive the renovation of the Full-Time MBA program with the global immersion. He’s participated in creating new specialized master’s programs. He’s overseen the launch of the Center for Digital Education and helped guide the center—and our faculty—through the pandemic. He helped in the development of our online programs and Olin’s strategic plan, ensuring our pillars of excellence are imbued throughout the curricula across our programs.
“On a personal note, I shall greatly miss our daily interactions on school strategy and management,” Taylor wrote last week. “I’m sorry to lose such a deeply committed and valued member of the senior leadership team, though I’m proud with the certain knowledge that he will be a great leader.”
