Based on research by Vikas Mittal and Eugene Anderson

• A product’s quality is not directly related to how profitable it is.
• Product performance, customer satisfaction and customer retention have a complex relationship with profitability.
• Knowing this, companies should make smart investments in areas that will maximize profits — and these areas are not always product quality.

Imagine you’re the CEO of a company that has just approved R&D for product improvements. You play the all-too-familiar riff — better product, we can charge more, customers will see more value, they will keep coming back and my company will make a lot of money. Higher profits, higher stock prices.

Not quite. The road from product quality to profitability is not what most CEOs envision. That’s why they can end up sapping profits and hurting both their customers and shareholders.

What a CEO needs to understand is her company’s satisfaction-profit chain: the correlation between how satisfied a consumer is with a product and how that affects customer retention and eventually a product’s overall profitability. For a long time, the relationship was assumed to be linear: The better the product, the higher the customer satisfaction. The higher the customer satisfaction, the higher the retention. The higher the retention, the higher the profit.

But research by Rice Business professor Vikas Mittal and Eugene W. Anderson, now the Dean at Syracuse University’s Business School, reveals something different. The relationship between customer satisfaction and product profitability, they found, is nonlinear and asymmetric. A better product, it turns out, does not guarantee a bigger profit.

Different product benefits translate differently to customer satisfaction. Think of a car. Benefits such as safety and reliability can prevent dissatisfaction, but they do not necessarily increase satisfaction. Other benefits such as interior styling and branding can really increase satisfaction, but they may not prevent dissatisfaction as much.

Companies that recognize that all product benefits are not the same — some are satisfaction maximizers, while others are dissatisfaction minimizers — can invest strategically to reinforce customer satisfaction.

But satisfaction alone isn’t necessarily enough. So businesses progress to the second link of the satisfaction-profitability chain: the prospect of bringing consumers back for more, or customer retention.

Although this varies by industry and market factors, a satisfied customer generally falls first into the “defection zone,” when she’s likely to decide if there is anything wrong with a product and if she likes it. Following this, Mittal and Anderson write, is the “consideration zone,” when she continues to be happy with the product, but is no more or less likely to change to something different.

Eventually, Anderson and Mittal write, the customer graduates to the “trust zone,” at which point she’s all but certain to stick indefinitely with a product or brand. Being happy with a purchase isn’t a straight line to lifelong fealty to a brand... but if that car keeps you happy for long enough, odds are you’ll buy a similar one next time around.

Return customers buy more things, and they buy them more often. Because they understand a company’s products and processes, they are easier and cheaper to maintain. As they have developed an affinity for an offering, they are more likely to recommend it to friends and family. They are a machine for revenue generation. That’s why companies that retain, maintain and sustain existing customers tend to do better than companies that are chasing new customers all the time.

It’s sort of like marital bliss. The payoff might not be immediate, but over time, as you sustain the relationship by making your customer (or your spouse) content, the rewards increase.

Getting the satisfaction-profit chain right, and knowing that a product is a good one, Anderson and Mittal write, still doesn’t directly translate into high profits. This is why it’s critical for companies to recognize these nonlinear relationships, investing in the products and product details that truly satisfy customers.

Vikas Mittal is the J. Hugh Liedtke Professor of Marketing at Jones Graduate School of Business at Rice University.

To learn more, please see: Anderson, E. W. & Mittal, V. (2000). Strengthening the satisfaction-profit chain. Journal of Service Research, 3(2), 107-120.

Like most B-School deans, I have given more than a few talks on the value and transformative power of an MBA. In official, academic settings this message is thoughtfully delivered within the context of the value of education writ large and is rightly connected to a message of personal, life-long growth. But, in a casual setting or an elevator, brevity rules and I just say, ‘this is the best career decision you’ll ever make.’

With a few more moments, I like to expand the conversation and talk about what all of us try to do every day: make a difference. We’re all working with teams of people trying to advance towards a goal that has meaning for us. That’s why we form groups and teams in the first place. Because we can’t accomplish big goals alone. Put another way, the purpose of any organization is to solve a particular set of problems, for their stakeholders, customers, and/or society. And, to that organization, you are worth the size of the problem you can solve. A business school’s job is to teach you to solve bigger and more complex problems – the ones all organizations face. In order to do that, we believe our students must be broadly and rigorously trained, empathetic and passionate. We’re looking to make leaders.
 

My name is Peter Rodriguez. I’m dean of the Jones Graduate School of Business, an economist, a family man and a wannabe photographer. If you don’t know Rice University and you don’t know Houston, I’d love to introduce you.

Rice Business is a young business school, founded in 1974 and named after Jesse Jones, a prominent Houston business leader, and philanthropist. The school sits in the heart of the Rice University campus — 300 wooded acres next to the Texas Medical Center, the museum district and the zoo. A short Metro ride to the innovation hub, downtown, the theater district and sports stadiums, Rice is a big part of the vibrant fabric of Houston. It was named one of the nation’s top five private universities and is consistently ranked in the top 15 in U.S. News.

Houston is the fourth-largest city in the U.S. and has one of the youngest, fastest-growing and most diverse populations in the world. At the same time, it feels accessible. You name it, we’ve got it. Oil. Gas. Healthcare. Banking. Tech. Startups. Food. Arts. Sports. (Did I mention the Astros?) And Texas charm. Whether you live here for two years and go off to a great new job in Seattle or New York or stay to make Texas your home, Houston is a great place to land for graduate school.

Even in such a large city and dynamic location, Rice Business offers a personal, tailored approach. We’re an intentionally small program in the nation’s most diverse city. With students and scholars from 89 countries, Rice is the second most international university in the U.S. Every student is handpicked for their experience, perspective, background, and interests.

At Rice Business, our classes are taught by a dedicated group of faculty with big reach. Reach, for us, means going beyond the classroom to unleashing our professors’ scholarship into the world. Rice Business Wisdom, our online ideas magazine, translates faculty research into short snappy articles and shares them weekly through email and in a magazine. That way, you can follow the kinds of things your professors are researching and talking about in class.

Rice Business is known for its #1 entrepreneurship ranking and the prestigious Rice Business Plan Competition — the largest and richest in the world. An MBA can help you start and nurture a business, if that’s your thing, then grow and sell it. Or it can help turn on your entrepreneurial mindset within your role in a large company. We have an ecosystem of courses, research, and programs for all of that, including the Lilie Lab, as well as co-curricular opportunities and connections to a thriving VC community.

We are also one of the only MBA programs to have an integrated global field experience (and more, if you choose) for each student in every MBA program as part of the curriculum. We know the value of understanding how business is conducted around the world. During your global field experience, you’ll work in teams on short consulting projects for organizations in the host country along with tackling a service project in the local community.

As a forward-thinking business school for the next generation of global leaders, we’re here to provide a business education focused on leadership, integrity and service. We designed our programs to provide the education and skills you need to advance professionally. The Career Development Office will partner with you to identify and meet your professional goals. From resume writing and group workshops to an online career course and one-on-one career strategy advising, you’ll have an experienced team on your side. That goes for our connected and collaborative alumni network, too. They’re accessible, active with the business school and interested in helping future alums.

If you're considering joining us, check out more of our admissions blogs for valuable application tips and insights into the admissions process.

Once you enroll, you’re part of the Rice family. Let us help you find a way to change the world and change your future. If you want to join the next class of Rice MBAs, get in touch with one of our recruiters and be ready to take the first step to solving the world’s biggest challenges. You belong here.

_________________________________________________________________________________

Interested in learning more about the MBA programs offered by Rice Business? Send us an email at ricemba@rice.edu.

Based on research by Robert E. Hoskisson (George R. Brown Emeritus Professor of Management), Brian L. Connelly, Laszlo Tihanyi and S. Trevis Certo

• Owners influence company management decisions.
• Ownership, in fact, is a form of corporate governance.
• As ownership becomes more varied and sophisticated, owners and managers both need to understand how ownership affects governance and management.

Skim the headlines of the Wall Street Journal, and it’s clear that owners interact with their corporations in a kaleidoscope of ways. Similarly, when owners sell, it’s not simply because the investment no longer fits their interests.

Instead, shareholder activists such as Carl Icahn use a broad range of sophisticated strategies to force corporate boards and management to take specific actions. Mutual funds do the same. A prime example: Ralph Whitworth’s mutual fund, Relational Investors, which drove Home Depot’s management to divest in its contractor services business.

How owners interact with firm management, in other words, has become an increasingly potent form of corporate governance. This is especially true now that activist investors hold a significant portion of U.S. and UK public equity.

But research about the ways that different ownership types governmanagerial actions has not caught up with this trend. In response, now retired Rice Business emeritus professor Robert Hoskisson and a team of colleagues surveyed the research in finance, accounting, economics, law and management to assess the existing body of knowledge.

As a first step, Hoskisson and colleagues differentiated between corporations with inside ownership and those with outside ownership. Inside ownership types include executives, board members and non-executive employees. Outside owners include blockholders, agent owners and private equity owners.

Inside ownership, the researchers noted, lends itself to coordinating owner and corporate interests. The idea is that owners may be more inclined to align their choices with managers’ interests if they have skin in the game. 

Outside owners complement inside owners, the researchers write, by more closely monitoring managers’ choices.

The researchers next delved into the effect of ownership structure on firms. Historically, owners shaped management they didn’t like simply by threatening to leave the business. Today, however, disgruntled owners have more options than taking the Wall Street walk. Depending on the owner and motivation, investors can make their wishes known with steps including triggering restructuring, plunging into activism or buying-and-holding.

Activist investors use a variety of tactics, including private meetings with management, hostile media campaigns or filing shareholder proposals through the proxy voting process or through the SEC, which allows owners to band together to influence firm or management behavior. Alternatively, one owner with a significant share position can influence behavior singlehandedly.

Finally, owners such as Warren Buffett, who buy and hold can play the long game. These investors are often especially valuable to companies because their loyalty lets management focus on action with longer-term benefits. General Mills' 2000 acquisition of Pillsbury exemplifies this: Although its initial quarterly earnings dropped, the corporation better positioned itself to compete with Kellogg in the long-term.

Overall, the researchers write, ownership affects firm outcomes, performance, strategy and governance processes. And this impact is substantive. Evidence shows that influence from internal ownership, outside blockholder ownership and long-term ownership all results in better firm performance.

So keep checking the headlines. After Occidental Petroleum acquired Anadarko Petroleum, for instance, Warren Buffet, T. Rowe Price and Carl Icahn each weighed in with a different strategy to advance shareholder interests. As Hoskisson’s team confirmed, such ongoing tussles and maneuvers between managers and owners are signals that much corporate governance takes place outside the office walls.

Robert E. Hoskisson is the George R. Brown Emeritus Professor of Management at Jones Graduate School of Business at Rice University.

To learn more, please see: Connelly, B. L., Hoskisson, R. E., Tihanyi, L., & Certo, S. T. (2010). Ownership as a form of corporate governance, Journal of Management Studies, 47(8), 1561-1589.

Ultrafast battery charging and a method to stop oil spills from spreading are among the technological advances touted by new companies honored this year at the largest energy tech venture capital conference in the U.S.

The Rice Alliance for Technology and Entrepreneurship announced the 10 most promising companies at the 17th annual Energy and Clean Technology Venture Forum held Sept. 10-11 at Rice University’s Jones Graduate School of Business. The companies showcased their new offerings at the conference attended by more than 750 investors, industry leaders, entrepreneurs, business executives, mentors and service providers.

The event culminated in the announcement of the 10 companies chosen from more than 180 applicants and judged by Rice Alliance energy and clean technology industry experts and participating investors. Fifty-seven companies presented business pitches at the forum, with an additional 31 participating in the company showcase and investor speed networking session. Over seventy investor groups, including nearly all the major energy operators and service companies, met with 88 companies the day after the forum.

This year’s participating companies were the most diverse in the history of the event, coming from eight countries and 19 states. Internationally, companies came from Germany, Norway, Italy, Brazil, Canada, Israel and Liechtenstein.

Five of the 10 most promising companies hail from across the nation and abroad: GBatteries from Ottawa, Ontario; HARBO Technologies from Tel Aviv; Lilac Solutions from Oakland, California; Mission Secure from Charlottesville, Virginia; and MolyWorks Materials from Los Gatos, California. The other five most promising companies are based in the Houston area: Nesh, Rheidiant, Sensorfield, Sensytec and Syzygy Plasmonics.

“Every year the quality of companies improves,” said Rice Alliance Managing Director Brad Burke, who, along with Brittany Sakowitz, a partner at law firm Vinson and Elkins, presided over the announcement of the award winners. “Over the past 17 years, more than 2,450 companies have presented at Rice Alliance Technology Venture Forums. These companies have raised more than $8 billion in funding. This speaks to the quality of the companies and to the robust entrepreneurial ecosystem in the Houston region that has developed to support these companies. It demonstrates that good companies have been able to attract investors.”

The 10 most promising companies:

GBatteries, Ottawa, Ontario:
GBatteries is an advanced battery technology company that can charge lithium-ion batteries ultrafast without compromising battery life or changing chemistry.

HARBO Technologies, Tel Aviv:
HARBO Technologies develops revolutionary oil spill response technology that immediately stops spills from spreading, significantly reducing their consequences.

Lilac Solutions, Oakland, California:
Lilac Solutions is a lithium-extraction technology company that has developed a patented process to lower the cost of lithium production.

Mission Secure, Charlottesville, Virginia:
MSi is an industrial control system cybersecurity company protecting key assets for defense and industry.

MolyWorks Materials, Los Gatos, California:
MolyWorks is building a distributed recycling and additive manufacturing network that converts metallic scrap into metal powders for additive manufacturing at the point-of-need.

Nesh, Houston:
This smart assistant for oil and gas companies helps them make better and faster decisions by organizing the complex industrial knowledge within the company and making it effortlessly accessible.

Rheidiant, Houston:
Rheidiant is a venture-backed startup helping innovative energy and power companies implement low-power, wide-area-based industrial Internet of Things solutions. Within a matter of weeks, without migrating data or replacing existing assets, it offers large enterprises with established IT and operational technology architectures modular tools to implement analytics-based solutions such as preventative maintenance, production optimization and leak detection.

Sensorfield, Houston:
Sensorfield provides a complete and uniquely simple plug-and-play platform for monitoring remote industrial equipment based on advanced, tiny solar-powered sensors with edge computing.

Sensytec, Houston:
Smart cement technology helps engineers monitor cement/concrete conditions accurately and continuously by providing real-time data to monitor the health and integrity of cement/concrete structures and to predict and prevent cement/concrete failures.

Syzygy Plasmonics, Houston:
Syzygy Plasmonics is developing a next-generation photocatalytic reactor to produce ultra-low-cost hydrogen gas on-site at customer locations.

The Forum was supported by:
Chevron, Shell, Exxon Mobil, Mercury Fund, Wells Fargo, Insperity, Accenture, BP, Saudi Aramco Energy Ventures, Total, Shearman and Sterling, Norton Rose Fulbright, TechnipFMC, Hess, Occidental Petroleum, Eunike Ventures, Silicon Valley Bank, Altira, Ara Partners, Cimarex, Clovis Point Capital, ConocoPhillips, DCP Technology Ventures, Energy Innovation Capital, Equinor, EV Private Equity, Evok Innovations, Intervale Capital, Lime Rock Partners, PIVA, SCF Ventures, Canadian Consulate, Hunton Andrews Kurth, Leyendecker Executive Search, PKF Texas, Vinson and Elkins, Waste Management, Energy Valley, ATI, Cleantech Open, EPIcenter, Greater Houston Partnership, Houston Exponential, Houston Angel Network, Southwest Research Institute and Rice Business.

Updated from original post that was published in 2019.

Your work ethic is tops. You’re shrewd about investing your money and talent. And you know your choices can change your world, so you're determined to make good ones.

Once you've decided to transform your career with a Rice MBA, the next step is picking the program that targets this world-class education to your specific goals. Laser-focused on a Full-Time MBA? Want to fine tune your leadership skills with an Executive MBA? Interested in turbocharging your future while staying on track at work with the Professional MBA or Hybrid MBA? Or taking the digital express lane with the MBA@Rice? Rice Business alumni are thriving thanks to each one of these programs. Here's how to choose the one for you.

Plug Into A Power Network With The Full-Time MBA

With 170 students whose makeup echoes the most diverse city in America, the full-time MBA offers a professional network that will last a lifetime. Its uniquely demanding and collaborative academic culture ensures that you will come away with top-flight business expertise – as well as an unmatched professional community, built by working together. In addition to classroom instruction and collaboration with their peers, full-time MBA students have the opportunity for a student internship over the summer which provide the chance to explore new, different job functions or even industries.

“Rice Business has carefully crafted a class with a wide array of backgrounds and future plans. From teachers and soldiers to accountants and engineers, there are a wide variety of experiences from which to draw wisdom, and this greatly enhances the in-class discussion,” says Patrick Ray (Full-Time MBA). 

Gain Skills While Working By Choosing The Professional MBA

There's little that can catapult you further at work than acquiring new skills. The Rice Professional MBA is for students committed to improving their abilities while continuing their current jobs.

The Professional MBA is designed for flexibility, and includes a part-time evening or weekend option that allows you to download new abilities in career accelerators. And students are able to take advantage of some less obvious benefits: a smaller yearly financial commitment and more opportunity for work-life balance.

The tradeoff for the focus required for the Professional MBA? Exhilarating new opportunities, earned without missing a beat in your career. “I always knew Rice had an exceptional reputation, but the high caliber faculty still surprised me,” says Abhayah Indupalli (Professional MBA). “Every professor is extremely passionate about the subjects they teach, and it's infectious. They will always make sure everyone understands a topic before moving on so you never feel like you're just one of many.”

"Business school is demanding and time-consuming," notes Professional MBA student Fernanda Castanon. "However, I consider it is the best investment you can make to have better opportunities for your professional progress."

Prepare For Top Leadership With An Executive MBA

If you’re already at senior level, you know you wouldn’t have reached that point without pushing yourself to learn. The Executive MBA is for seasoned executives and managers who have an average of 15+ years’ experience – and are ready to gain breadth of knowledge outside their current areas of mastery. The Rice Executive MBA will give you and your classmates training in leadership, strategy and decision-making skills. In addition to core instruction, experiential training with your cohort and mandatory international experience, the Rice Executive MBA offers each student personalized executive coaching.

“I chose Rice for my EMBA because it is the best school in Texas,” says Don Hobson, director of engineering at On Center Software. “I needed a program that would not disrupt my career or family while still providing a rigorous curriculum from a highly ranked educational system, a great alumni network and world-renowned professors.”

Access Innovation, Efficiency And World-Class Teaching With MBA@Rice

You already do much of your best work online: communicating and creating, analyzing and building. MBA@Rice uses the technology of the 21st century workplace to propel you ahead professionally. No matter where you are, MBA@Rice gives you a globally competitive business education, with no need to leave your home and work commitments.  

The core curriculum, the same as the campus-based MBA programs, develops understanding of critical business principles such as business analytics, marketing strategy, leadership and finance. It also permits you to apply these skills in a focused specialization. The second-year curriculum empowers you to apply the skills in your own, self-designed focus area.

The flexibility of online study allows you to earn a Rice MBA degree wherever you live. This digital efficiency is enhanced with essential human interactive training: each term, a week can be devoted to an Intensive Learning Experience or Rice's signature Global Field Experience, available in all of the school’s MBA programs. "Today's prospective students are digital natives," Rice Business Dean Peter Rodriguez says. "By extending our reach, we will be able to attract students who can't come to campus but still want to join a top MBA program."

Online or in person, in a full-time cohort or complementing the workweek, Rice offers an array of options for gaining your MBA. Regardless of the time frame or medium, you can be confident your investment is sound: a Rice MBA provides top preparation for the specific professional future you want to create.

Explore the Rice MBA

As concerned citizens and environmental activists prepare for the 2019 United Nations Climate Change Summit in New York City Sept. 23, Rice University researchers are available to discuss various topics related to the event.

Bill Arnold, professor in the practice of energy management and a former energy industry executive, is available to comment on the issues at play at the intersection of corporate interests and culture and public policy. He said as the climate debate heats up ahead of the 2020 U.S. elections, the country’s oil and gas companies want to get in front of the curve. But they may be hampered by a longstanding culture of playing defense, he added.

“The oil and gas companies want to get ahead of the curve but want to avoid claims of greenwashing, so their investments in renewables, both research and operations, are more bite-sized,” Arnold said. “Of course, that generates criticism by contrasting tens of millions of dollars of investments for renewables against hundreds of millions and billions for oil and gas. The majors have a record of falling into defensive mode when criticized, and it’s built into the DNA of many older executives. But this is being challenged by their own younger employees as well as activists.”

Jim Blackburn, professor in the practice in environmental law, can discuss understanding and planning for severe storms such as hurricanes and major rainfall events, including various structural and non-structural solutions. He can also talk about carbon footprints and the use of nature (including grasslands, saltwater wetlands and forests) to remove carbon dioxide from the atmosphere. He can also discuss carbon neutral design as well as the role of the market system in forcing this type of design.

“The climate summit should recognize and address the huge contribution that can result from carbon dioxide removal and storage in natural ecological systems such as grasslands, marshes and forests,” Blackburn said. “These will be an important economic activity in the future as emitters seeking to become carbon neutral by 2050 begin to pay landowners for the removal and storage of their carbon footprint. This in turn could easily redefine United States agriculture in the 21st century.

“The economic, social and ecological advances required to attain the sustainable development goals are directly related to addressing carbon dioxide and other greenhouse gas emissions. Without controlling carbon, it will be impossible to meet the sustainable development goals of the United Nations.”

Dominic Boyer, a professor of anthropology and founding director of the Center for Energy and Environmental Research in the Human Science at Rice, can discuss topics related to renewable energy and energopolitics. His work on climate change topics in Iceland and the recent installation of the world’s first memorial to a fallen glacier has been the subject of significant international media attention.

“The Ok glacier memorial demonstrates how the natural sciences, human sciences and arts can work together to raise climate awareness and inspire climate action,” he said.

Dan Cohan, an associate professor of civil and environmental engineering, can discuss the science of climate change, U.S. emissions and policies, technologies for mitigating climate change, reducing emissions and the interaction between air pollution and climate change.

“This summit is the latest attempt to bridge the gap between the ambitions of the Paris Agreement and the reality of rising emissions,” he said. “What I’ll be looking for is how American cities, states and businesses step into the void to keep the United States relevant to the quest for climate solutions.”

Sylvia Dee, an assistant professor of Earth, environmental and planetary sciences, can comment on rates and context of climate change as well as its impacts in the U.S.; CO2 forcing scenarios and “safe” warming targets; climate change and human migration, adaption and impacts; changes in the hydrological cycle including drought and extreme precipitation; and changes in hot temperatures, including 100-plus degree days.

“The international community has to move as fast as possible to reduce greenhouse gas emissions and environmental degradation via any means necessary,” Dee said. “Livable temperatures, clean air, clean water and generally maintaining the habitability of our planet is not a partisan issue for any nation.”

Cymene Howe, an associate professor of anthropology, can discuss the political and social contingencies of renewable energy development as well as the social and political significance of ice in the Arctic. Her work in Iceland and the recent installation of the world’s first memorial to a fallen glacier has been the subject of significant international media attention.

“In addition to the science, we really need to understand the social and cultural impacts of climate change, because the climate crisis is a social problem just as much as it is an environmental one,” Howe said.

Caroline Masiello, a professor of Earth, environmental and planetary sciences, can discuss mechanisms to remove CO2 from the atmosphere and the role of technological approaches and nature-based approaches.

“Long term, we need the kinds of multi-stakeholder engagement that this summit provides,” she said. “We need this type of meeting, and more: opportunities for governments, businesses and NGOs to work together to transition to renewable energy, sustainable agriculture and resilient cities. All these stakeholders are needed to develop functional models of a habitable future for our planet.”

Rouzbeh Shahsavari, an adjunct assistant professor of civil and environmental engineering, can discuss curbing CO2 emissions due to manufacturing of construction materials. Shahsavari said that concrete is the most widely used manufactured material on the planet and contributes to 5-7% of total CO2 emissions worldwide.

“I believe future building materials will come from mixing CO2 and industrial wastes such as flyash, slag and plastic wastes, etc., thereby avoiding using virgin cementitious materials and the associated CO2 emissions,” Shahsavari said. “Simply put, we’ll turn trash into treasure.”

Rice University has a VideoLink ReadyCam TV interview studio. ReadyCam is capable of transmitting broadcast-quality standard-definition and high-definition video directly to all news media organizations around the world 24/7.

To schedule an interview with any of these experts, contact Amy McCaig, senior media relations specialist at Rice, at 713-348-6777 or amym@rice.edu.

This news release can be found online at news.rice.edu

Follow Rice News and Media Relations via Twitter @RiceUNews

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