By William M. Arnold 

This article originally appeared in The Hill. 

The early days of 2018 are a good time to consider America’s energy landscape and how it impacts our broader global competitiveness. The outlook is good.

The shale revolution in the U.S., OPEC’s varied responses, changes in federal regulations, as well as the cost of oil and gas here, relative to the rest of the world, all impact the country’s economy.

These dynamics have been in active play for close to a decade but seem to have reached a “new normal” in recent months.

The implications of the shale revolution are many. It provides an unprecedented level of energy security as U.S. production reaches levels unseen for 30 years and puts us among the top three producers in the world. Politically, this provides some immunity from crises in places like Venezuela and Nigeria.

It also encourages energy companies, large and small, to invest tens of billions of dollars back in the U.S. over countries with less stable business environments. That translates into high-paying jobs and economic growth in places like West Texas, North Dakota and Pennsylvania.

OPEC’s response has been erratic since the collapse of oil prices three years ago. In early 2015, many U.S. producers bet, to their misfortune, that OPEC would cut its own production to stabilize prices above $70 a barrel. Instead, OPEC let market dynamics rule and prices collapsed by more than 70 percent into the high $20s.

More recently, OPEC and other major producers like Russia agreed to cut production, and they showed discipline in the implementation. That helped drive prices to about $60 in the U.S. and $65 outside the U.S. (the “Brent” market). The $5 difference between oil in the U.S. and the rest of the world adds to our competitiveness as the price of refined products plays out in the cost structure of economies.

While oil prices have rallied, U.S. natural gas continues to be cheap (aside from Arctic weather spikes) because of abundant supplies, new technology, infrastructure, ease of market entry and available capital. This has led to the rapid-paced closure of uncompetitive coal-fired power plants across the country. A consequence of this has been the drop in America’s carbon dioxide emissions to a 20-year low.

Many of the nations with which we compete in Europe and Asia pay two to three times, or more, for the clean-burning fuel that provides residential, commercial and industrial power. America is now exporting natural gas that supports the independence of vulnerable countries like Lithuania, which had been dependent on Russian supplies until they built a facility to import liquefied natural gas.

Cheap natural gas is also having a dramatic effect on the nuclear power industry. Many U.S. facilities were built decades ago and are at the point where they would need major refurbishment. But in the current price environment, many of these plants are slated for closure instead of renovation, which would cost tens of billions of dollars. New facilities are few and have been subject to dramatic cost overruns.

Wind power has emerged as a growing source of energy, at times providing a majority of power supplied in Texas, home to the greatest concentration of producing turbines in the U.S. The prospect for offshore wind, which has been a factor in Europe for many years, adds to the potential.

Subsidies are still an important economic component and interstate transmission is a challenge. Solar has grown exponentially but from a very small base, with sharply declining costs, but has had less widespread impact.

The Trump administration has attacked regulation broadly, especially in energy. The recent proposal to open nearly all offshore areas to oil and gas drilling — in Alaska, the Eastern Gulf of Mexico and the Atlantic and Pacific coasts — is a dramatic example.

There will be political and environmental challenges. The lease sales would run between 2019 and 2024, when prices for oil and gas are difficult to foresee.

Previously, President Trump announced he would abandon the Obama administration’s Clean Coal Plan that had already been suspended by the U.S. Supreme Court. In contrast, the Department of Energy has proposed initiatives, now pending, to provide financial support to coal and nuclear because of their reliability of supply for power generation.

Also, disputes over regulation of fracking on federal lands tipped in favor of state regulators. And the Interior Department is rolling back offshore drilling safety rules in light of the industry’s adoption of new safety practices.

The recently signed tax overhaul drops the corporate rate for all industry. Ironically, though, companies like Royal Dutch Shell had to take billion-dollar financial charges in the fourth quarter of 2017 because this impacted the value of tax losses that they carry forward. But the dramatically lower federal taxes will favor U.S. production as companies decide on future portfolio allocations.

The convergence of these seemingly diverse factors combine to provide a fruitful basis for strength across the U.S. economy as 2018 gets underway.

Bill Arnold was a professor in the practice of energy management at the Jones Graduate School of Business at Rice University.

Based on research by Erik Dane (formerly Rice Business) and Jennifer M. George (Rice Business) 

Key takeaways:

• Passing moods and deep emotions are both integral to the quality of our decisions.
• Affect — the moods and emotions that are experienced — drive decision making.
• Regret is a powerful factor in confronting potentially difficult decisions.

You’re a senior executive and you have to make a major decision. What’s your mood? The answer wields more power than you may guess.

The emotional environment surrounding business decisions is usually dynamic, and often turbulent. By its very nature, decision-making in large organizations is a messy, complicated and ambiguous process. In this whirl of activity, emotional states can affect decisions even more dramatically than the decision-maker may know. Whether he or she realizes it or not, emotions ranging from rage to pleasure at someone else’s discomfort can indirectly lead to huge financial gain or devastating loss.

In a recent study, Rice Business Emeritus Professor Jennifer M. George and former Professor Erik Dane analyzed the scientific literature showing how emotion and mood — i.e. how an individual feels — influence decision-making.

Let’s say, for example, you are one happy executive. Cheerful people make the best decisions, right? Not necessarily, George and Dane found. Research suggests that happy people believe positive outcomes are more likely than negative ones. So cheerful decision-makers often overestimate the likelihood of a positive outcome and underestimate the chance of a negative one. And that’s not necessarily a happy thing.

In a study of foreign exchange traders, for example, participants who were in a good mood were overall less accurate in their decision-making, lost money and took unnecessary risks compared to both those in a control condition and those in a bad mood.

Another widespread assumption: The more complex a situation, the more thoroughly an executive conducts research prior to making a choice. But moods can also affect how we engage and understand research. George and Dane found that decision-makers in a negative frame of mind tend to be more focused when facing a high-risk situation. Decision-makers who feel more upbeat tend to be less focused in their information search.

Anger, on the other hand, can undermine good decisions. People who experience anger, the researchers found, are prone to take greater risks. Anger can, though, work wonders in helping to evaluate others, especially when those evaluations are less than positive.

Some of the most anti-social emotions, in fact, may bolster good decision-making. According to two studies, schadenfreude, or “feelings of malicious joy at the misfortunes of others,” prompted subjects to make more practical choices than they did when feeling happiness or sadness.

And in many cases, mood and decision-making are circular. Consider a manager forced to choose between two very bad product options. In one study from 2000, people were asked to choose between two low-quality alternatives, one of them lower-priced and the other a somewhat better product, though still low quality. Facing two miserable choices made the subjects so despondent that they chose the higher-quality option — but simply as a response to emotion.

The role of regret in decision-making has inspired especially broad research. In some cases regret surges even before a decision is made. In other cases it’s a consequence of the decision process itself.

Either way, regret can have profound implications in the business world. Let’s say that a manager is faced with a series of difficult choices. Research suggests that people feel more regret over a choice that goes bad than over making no choice at all. Acting on this dynamic, the hypothetical manager may delay important choices until it is too late to make a difference.

While the role of emotion in decision-making is vast, George and Dane note that it’s also under-researched. For the business world, more study is needed on the role of emotion in complex business environments. Far from being frivolous, emotion, it turns out, is the quiet engine powering every choice we make — not to mention those choices that others make to hurt or help us.

George & Dane (2016). “Affect, Emotion, and Decision Making,” Organizational Behavior and Human Decision Processes.

Based on research by Jing Zhou, Elizabeth M. Campbell, Hui Liao, Aichia Chang and Yuntao Dong

Every business wants the best and the brightest. Once they spot these top talents, corporations typically lavish time and money to hire, train and groom them for success. Life should be simple for the lucky hires.

But if you’ve ever watched crabs trying to climb out of a bucket, you know it’s not. The closer any one crab gets to the top, the more likely it is to evoke the spite of its fellow crabs, who will try to drag it back down.

A study coauthored by Rice Business professor Jing Zhou shows that while high performers bring substantial value to their organizations and workgroups, they also attract inordinate social attention — not all of it positive. The findings are especially important because high performers are less likely to stay with their organizations or sustain exceptional success if their social experiences at work are difficult.

And for many top performers, that’s clearly the case. A full 30 percent of top corporate employees leave their firms within one year, according to Zhou and coauthors Elizabeth M. Campbell of the University of Minnesota, Aichia Chuang of National Taiwan University, Yuntao Dong of the University of Connecticut and Hui Liao of the University of Maryland. For years, the scholars write, employers assumed that their workplace stars were either too bored or too restless to stay put. Now research shows that they leave their jobs because of how they’re treated.

To add to this body of research, Zhou and her colleagues conducted a time-lagged study of 414 hair stylists working for 120 salons in northern Taiwan. Why salons? Stylists, the researchers explain, work in open spaces where their peers can see their performance. And because salons are magnets for employee chatter, Zhou’s team could easily monitor interactions there.

What they found was a subtle and stressful power struggle. On the one hand, as high performing stylists improved their job performance, peers saw them as beneficial to their own images. Less talented workers attached themselves to rising stars, hoping the reflected light would also illuminate their prospects.

But even as the top stylists reaped attention and support from their peers, they were perceived as threats. Whenever the best performers got attention, those around them became jealous.

This finding soon led to a second discovery. The colleagues of the high performers weren’t just jealous; they were actively working to undermine the high performers at the same time they were supporting them.

The toll was great, Zhou writes. It would be one thing if high achievers knew their colleagues either admired them or hated them. But the unspoken tug-of-war between support and sabotage caused a unique strain.

In such toxic environments, the high achievers found work more stressful than their less-accomplished colleagues. This, the researchers believe, likely accounts for why so many top performers leave their jobs for other opportunities.

To a certain extent, Zhou and her team say, such stress is hardwired into the workplace. Employers value workers who function as a team. At the same time, they prize individuals whose achievements stand out from the group. With such contradictions, the particular stress that plagues high performers may be inevitable.

So what’s the lesson? True, star performers earn higher pay and receive faster promotion. But these perks come at a social cost. No wonder achievers struggle to maintain top performance levels and typically leave their firms sooner than their coworkers.

In general, employers need to closely attend to their employees’ wellbeing, taking into account the unique social stresses that affect high performers. Ideally, managers can craft environments in which the top achievers — and their more average associates — all feel welcome.

According to Zhou and her colleagues, such harmony isn’t just about keeping a few divas happy. Undermining and jealousy, their findings show, actively drive off top performers. It’s only natural for crabs to claw their fellow crabs back into the heap. So it’s up to managers to protect their best performers — or end up with a bucketful of motionless crustaceans.

Jing Zhou is the Mary Gibbs Jones Professor of Management and Psychology in Organizational Behavior at the Jones Graduate School of Business of Rice University. 

To learn more please see: Campbell, E.M., Liao, H, Chuang, A., Zhou, J., & Dong, Y. (2017). Hot shots and cool reception? An expanded view of social consequences for high performers. Journal of Applied Psychology, 102(5), 845-866

By Utpal Dholakia

This article was originally posted on LinkedIn.

I just finished writing a paper called, "All's Not Well on the Marketing Frontlines: Grasping the Challenges of Adverse Technology–Consumer Interactions."

There are far too many technology-driven phenomena that are gathering like storm clouds on the horizon that mainstream marketers are not paying sufficient attention to. There are many examples of this, whether it is the rise of technology-enabled retail fraud by consumers, consumers’ resistance to using self-service technologies and cashless payment methods, the insidious effects of fraudulent negative reviews and social media flare-ups by customers on businesses, the negative effects of consumers' low attention spans and distraction because of smartphone use, survey taking by professional respondents, and the list goes on and on. So I wanted to write about this issue.

Here's the paper's abstract.

The prevailing marketing worldview is one of technology optimism, which holds that consumers and marketers are influenced by technological advances in positive ways. In contrast, the central thesis advanced in this paper is that at the organizational frontlines where marketers inform, persuade, observe, and co-create products and services with customers, technology commonly produces unforeseen and unexpected effects on customers with significant negative implications for marketers, the so-called “Adverse Technology-Consumer Interactions” or ATCIs. Marketers play an instrumental role in producing or exacerbating an ATCI, yet have few incentives to fully investigate the underlying reasons, understand its scope, or find solutions. Academic researchers, on the other hand, are uniquely poised to identify ATCIs, investigate them in-depth by considering their industry-wide import, develop appropriate theoretical frameworks, and design and test solutions to alleviate their effects. These ideas are developed through the detailed consideration of two ATCIs, falling response rates to customer surveys, and customer reactance to frequent price changes. Promising research opportunities are highlighted in each case.

The entire paper is available here.

It's very much work in progress, so I would love to hear thoughts and criticisms.

- Utpal Dholakia.

Utpal Dholakia is the George R. Brown Professor of Marketing at Jones Graduate School of Business at Rice University.

Based on research by Douglas A. Schuler; Robert E. Hoskisson (George R. Brown Emeritus Professor of Management), Wei Shi and Tao Chen

• In China, where information on public companies is scarce, a visit from a high official is a coveted signal of government confidence.
• Such visits result from complex, longtime bonds between the state and the firm.
• Depending on the status and location of the host company, some high-level visits have more market value than others.

For a Chinese business owner, when the sixth Premier of the State Council of the People’s Republic of China inspects your factory, it’s likely to be one of the biggest days of your career: the modern equivalent of a royal handshake.

It may signal that your firm is the kind of enterprise the Chinese government supports. It may mean your firm’s sector holds strategic importance for the most populous country on earth. And if your business or economic sector is suffering a global downturn, it indicates that one of the world’s most powerful states supports your efforts.

Surprisingly, though, there’s little literature about the interactions that make such high-profile appearances happen. Does a visit from the Chinese premier or president mean more for some types of firms than for others? Is it more important for a privately held firm than for a state-owned enterprise? And is it more or less significant for a firm in parts of China not normally exposed to such attention?

Rice Business Professor Douglas Schuler and Emeritus Professor Robert E. Hoskisson joined Wei Shi of Indiana University’s Kelly School of Business and Tao Chen of Nanyang Business School in Singapore for a close look at high-level visits and their implications. To conduct their research, the team first combed the Internet for accounts of such visits. Then they did a deep dive into reports of 84 visits by Wen Jiabao, Chinese premier from 2003 to 2013, and Hu Jintao, Chinese president from 2002 to 2012, to study the impact of these visits to firms on the Shanghai Stock Exchange.

Official visits, the team found, largely took place in the context of previously existing relationships between managers and government representatives. And though the visits ultimately occurred after senior government officials requested them, advance work always came first. Curiously, the researchers found, these visits weren’t necessarily designed to influence government policies. Instead, they were a continuation of relationships that were already flourishing.

In China, government looms large in business, and information about the health of a given firm may be opaque. So government visits send a message of assurance, especially to investors. That said, the researchers found that the impact of a high level government visit varied, depending on factors that include the firm’s ownership status and even its location.

The researchers found that a visit had the greatest impact on stock prices of firms in provinces not known for economic development. They found a similar positive effect from visits to privately-owned companies, as opposed to public companies, which are mostly government-owned but publicly traded.

While China’s government has a direct interest in propping up state-owned businesses, a visit to a privately-owned business telegraphs its willingness to stake its reputation on that company. It may also suggest that firm managers have a personal government link, worth its weight in gold in Chinese business.

Political connections do enhance a company’s appeal. But for the Shanghai stock market, a high-level visit to a company that’s not politically connected may be even more impressive. It signifies a scrappy business that has overcome ordinary obstacles and been recognized by the premier or president strictly on its merits. Investors around the world, it seems, still love a rags to riches story.

Douglas A. Schuler is an associate professor of business and public policy at Jones Graduate School of Business at Rice University. 

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

For learn more, please see: Schuler, D.A., Shi, W., Hoskisson, R.E., & Chen, T. (2017). Windfalls of emperors’ sojourns: Stock market reactions to Chinese firms hosting high-ranking government officials. Strategic Management Journal, 38(8), 1668-1687.

Based on research by Michelle "Mikki" Hebl, Eden B. King and Charles L. Law

Being gay, lesbian or bisexual in the workplace often means facing choices that are deeply unfair. Choose to come out and risk being stigmatized. Hide your orientation and prepare for a career weighted with the immense stress of secrecy. Theoretically, there are good reasons for businesses to embrace a workforce with diverse sexual orientations. First, much workplace discrimination is illegal, and litigation is pricey. More importantly, disdaining 5 to 15 percent of your workforce (the estimated percentage of the workforce population who are gay, lesbian or bisexual) means lagging behind the competition in the ability to recruit and retain top talent. But in reality, the legal protections prohibiting discrimination against employee’s sexual orientation are often limited and what should be the rational business choice isn’t always made. 

In an article published in The Encyclopedia of Industrial and Organizational Psychology, Rice Business professor Michelle "Mikki" Hebl explores the gamut of workplace challenges for gay, lesbian and bisexual workers. Misconceptions about these employees, she found, are still widespread. First of all, employers and coworkers who stigmatize homosexual or bisexual employees often misunderstand their orientation as a choice. The subsequent treatment based on this misinformation can be viciously destructive.

Another common misperception is that sexual orientation can be easily concealed. To the contrary, many gay, lesbian or bisexual workers are actually outed by co-workers, Hebl notes. Because of this possibility, gay, lesbian and bisexual employees often spend an inordinate amount of their work time and energy simply managing their coworkers’ response to their sexual orientation.

And while some people characterize sexual orientation as simply a political issue, those who are gay, lesbian and bisexual employed in a toxic workplace are often not seen simply as undesirables. They can be considered actual threats, their sexual orientation capable of somehow altering the identities of fellow workers. In some cases, associations with HIV and AIDS can lead to gay, lesbian and bisexual workers being treated as physical risks.

Because of these obstacles, many workers are forced into painful choices at work. Do I put my partner’s photo on my desk? Do I mention my weekend plans?

To reduce this burden on productive workers, Hebl writes, businesses should codify their formal rules about managing harassment. Informally, companies need to create a culture in which people of different sexual orientations are supported rather than punished for their sexual orientation.

But companies should know this road won’t always be easy. Some workers will balk at a more diverse environment. The existence of clear policies, moreover, doesn’t guarantee that subtle forms of discrimination won’t take place. But the consequences of not establishing policies are considerable, including litigation and high turnover rates.

In the best of all worlds, the burden of change should not be on the gay, lesbian and bisexual workers themselves. But it’s not a perfect world, so Hebl also proposes strategies to help employees maximize workplace acceptance.

These days, evidence suggests that in some cases, disclosing one’s sexual orientation has benefits. Especially in supportive organizations, it often makes sense for people to reveal their sexual orientation after a period of time and with the support of other employees.

At the same time, Hebl notes, employees may be likely to bully gay, lesbian and bisexual employees whose orientation is the only thing that’s is known about them. Thus, gay, lesbian and bisexual workers face a challenge well-known to other minority employees: delivering exceptional work and displaying exceptional character in order to attempt to allay discrimination.

From an institutional perspective, employers can support their individual gay, lesbian and bisexual employees in myriad ways. Companies can create a welcoming culture by offering same-sex partner benefits. Anti-discrimination policies, frequently voiced, send a message of safety to gay, lesbian and bisexual employees. Such measures require both awareness and real commitment, but the extra efforts pay off well beyond the day-to-day business of hiring and retention. They also encourage open-mindedness, creativity and commitment – and in the end, a more competitive work product.

Michelle Hebl is the Martha and Henry Malcolm Lovett Chair of Psychology at Rice University and a professor of management at Jones Graduate School of Business at Rice University.

For more information please read: Hebl, M., King, E. & Law, C. (2007). Gay, lesbian, and bisexual issues at work. In S. G. Rogelberg (Ed.), Encyclopedia of industrial and organizational psychology (Vol. 1, pp. 264-266). Thousand Oaks, CA: SAGE Publications Ltd.

This article originally appeared in the Houston Chronicle. 

Dustin Windham's at the grill on the roof of Houston House apartments, watching Gulf Coast shrimp turn perfectly pink.

It's Wednesday night. As he cooks, his broad-shouldered silhouette framed against the lights of downtown high-rises, a table of guests, most meeting for the first time, share stories about Harvey. Waiting for the shrimp, they look over a spread of roasted organic sweet potatoes, guacamole made from scratch, a cole slaw of fresh purple cabbage and shredded carrots. And plenty of local beer and wine.

If Windham had his way, this is how we would eat every night, all over the city.

It's what he learned to do when he served in the Peace Corps in Azerbaijan. Used to the wall-to-wall abundance of the estimated 38,000 supermarkets in the U.S., he was forced to eat there in a new way.

That's because there weren't any supermarkets. Instead, he says, everyone went about once a month to the bazaar for staples, and the rest of the time picked up what they needed from the produce stand or the butcher shop. Walking home from work, Windham would stop for a few ingredients — some fish, some seasonal vegetables, some baked-that-day bread — and then go cook, usually with friends. "Most Americans don't get that opportunity," he says, "but I learned that it's a better way to do it."

He lost 30 pounds, and he had an idea: Why can't we create that opportunity in Houston? Why can't we eat like that here?

It's a city that could stand to lose a few pounds itself. Almost 66 percent of Texans are overweight, nearly 28 percent obese. According to Roberta Anding, a dietitian and professor at Baylor College of Medicine and Rice University, food-related diseases plague Harris County: The rate of diabetes here is higher than the national average, and it's even worse for people of color; 70 percent of adults surveyed recently by the Houston Health Department take medication for high blood pressure.

Harris County also has one of the highest death rates among the most populous U.S. counties from obesity-linked cancers.

"We have a link between the amount of produce on your plate and disease," Anding says. Meanwhile, the average Texan gets just 1.6 servings of fruits and vegetables a day (The U.S.D.A. recommendation is 5). Forty percent of Texans report eating less than one serving a day. Anding says, "We have a crisis of diet."

And it's a complex crisis, compounded by many other factors, none of them simple to solve in and of itself. One is a basic lack of access to those fruits and vegetables. In 2015, the Chronicle reported that as many as 500,000 Houstonians live in "food deserts," defined by the absence of a supermarket in a one-mile radius. Calories have to come from somewhere, though, and they tend to be found at corner and convenience stores and fast food restaurants — where processed foods are most readily available.

Another is education. Even if you can access fresh fruits and vegetables and fish and lean meats, you have to know how to cook them when you get home. It is not self-evident what to do with a beet.

And another is time. "Parents are busy," says Dr. Faith Foreman, the assistant director of the Houston Health Department. "They're trying to get kids to school, trying to do homework, get dinner, and they start all over tomorrow. It's tempting to hit McDonald's on the way home. It's easy to do that."

These factors lead to a sad conclusion: Our cities are filled with people who aren't eating — and therefore aren't feeling — all that well. "It's a complex problem," Foreman says, "and it requires a complex response."

What cities tend to do, says Doug Schuler, an assistant professor of business and public policy at Rice University, is identify what he calls "supply-side" and "demand-side interventions." You can try to change the foods that people want or change how they get it. In Houston, these interventions range from education programs in elementary schools to shopping tours to city-backed loans like the one Pyburn's Farm Fresh Foods received in 2014 to develop a store in OST/South Union, a food desert.

But even then, consumer behavior is hard to impact.

Six months after that Pyburn's opened, a survey conducted by the Health Department found that there wasn't an increase in the amount of vegetables, whole grains, fish and other seafood that residents purchased there.

"We didn't see much change," says Beverly Gor, a registered dietitian who works for the city.

The same was found to be true in New York City, where a new supermarket developed in a food desert in the Bronx didn't change consumer behavior, either: "The neighborhood welcomed the addition, and perceived access to healthy food improved," concludes Margot Sanger-Katz. "But the diets of the neighborhood's residents did not."

Time, education, access and consumer behavior: Windham wants to provide another intervention, albeit from the private sector, that could help Houstonians with all of these. In 2015, with business partners Michael Powell, Jamal Ansari and Kelly Windham, he founded Grit Grocery.

Windham says he's not a foodie, but Grit Grocery is kind of a foodie's dream. It's a farmers market on wheels, a bodega that parks on your block, stocked with fresh produce and proteins as well as local pasta, cheese, honey, bread and more.

It attempts to replicate for a low-slung, far-flung city pockmarked with food deserts the experience that Windham had in Azerbaijan.

Grit first rolled out in five Houston neighborhoods — downtown, EaDo, Midtown, Museum District and Magnolia Grove — parking in the evenings near apartment buildings when residents were getting home from work. And it was a hit. "It made it easier for me to cook," says Megan Sip, who lives in EaDo and shopped at the truck near her apartment by BBVA Compass Stadium.

"It became a nice community aspect, too," she says. "I'd meet other neighbors out there. It's almost like a watercooler at the office."

Now, while the original truck still makes occasional appearances, Windham is looking to finance through an equity crowdfunding campaign a fleet of trucks, which he will need to match the scale of his ambition — and the scale of this city. Eventually, Grit will also be coupled with a mobile app that will let customers order easy-to-cook preset "meal bundles" that can be tossed in a pan with some olive oil and will include a feature that helps them organize dinner parties.

It's slow food meets high tech.

Already, he has the support of customers like Sip, who says she wants to invest, and Mayor Turner, who calls it a "tremendous opportunity" to create more access and sees an intervention like it as crucial to his Complete Communities initiative.

Foreman says, "It's definitely an opportunity not to solve, but reduce, food insecurity in food deserts. They're on the right track."

Grit Grocery comes at an interesting time. As food-delivery services like Instacart and meal-kit ones like Blue Apron increase in popularity, supermarkets are changing — they're being forced to. In "Grocery: The Buying and Selling of Food in America," Michael Ruhlman traces that change. There might always be Targets and Walmarts — the American version of the bazaar — but many supermarkets have become less super, smaller, focusing less on processed foods and more on fresh produce and proteins.

"Our generation," says Windham, "is learning how to interact with food again. We're recognizing that food preferences are changing."

Now that Amazon has purchased Whole Foods, this change might become only more accelerated. One of Ruhlman's sources, the co-CEO at Midwestern supermarket chain Heinen's, predicts that supermarkets will continue to shrink in size: "If Amazon has its way," he tells Ruhlman, "that stuff in the center of the store will all be delivered to your door. And we'll go back to the old days, where it's all specialty stores."

How small with they shrink? How special will they be?

Windham's betting that it might be as small as a single truck, parked in the right place, providing the right few things at the right time. Maybe that will help the city with food deserts, with diabetes and high blood pressure, with obesity.

"You can have convenient and healthy," he says.

But there's also a reason he named the company "grit." He knows that addressing all these problems isn't going to be easy.

Based on research by Vikas Mittal (Rice Business), Rahul Goving (UNSW - Sydney), and Rabikar Chatterjee (Pittsburgh)

Key takeaways:

• For national retailers, a new model shows how to satisfy consumers based on their psychological preferences and geographic location.
• Managers can use this model for better efficiency in their efforts to meet customer needs.
• The model can also give insight into the preferences of like-minded individuals with shared socioeconomic or demographic characteristics.

Will the Jetsons be the reality of the Millennials’ middle age? After all, videoconferencing is already the norm thanks to Skype and Facetime. Drones deliver our packages. Amazon owns Whole Foods, so pressing a button for breakfast might not be far off. As science turns fiction into reality, major retailers from Amazon to Kroger need to stay attuned to consumers if they want to stay relevant.

From Sydney to Pittsburgh to Houston, researchers are developing new tools to adapt their strategies to local demands. Rice Business Professor Vikas Mittal collaborated with colleagues Rahul Govind and Rabikar Chatterjee to create such a tool, which they call Spatially Dependent Segmentation (SDS).

Over the years, marketers have segmented customers either based on geography or their psychological beliefs. In one segmentation model, people living in the same zip code are classified as belonging to one segment (e.g., urban or rural). In another approach, customers are classified according to similar beliefs (such as prioritizing price or prioritizing service). The SDS approach does something different: It simultaneously considers consumer psychology and geographic location.

First, the scholars gathered multiple observations about consumer attitudes and needs in each area under analysis. Next, they incorporated estimates that group together similar units into spatially contiguous market segments. This allowed them to estimate consumer satisfaction levels in market segments that were spatially contiguous.

Developing market segments around concentrations of consumers with similar values, culture, and socioeconomics helps big retailers pinpoint ways to satisfy consumers at individual stores, even in very different neighborhoods. For example, big retailers no longer need to view all rural customers through the same lens. 

By clustering areas with similar consumer profiles, retailers of all kinds can more accurately choose products, services, and pricing, as well as provide training to employees and enough parking for customers at individual stores. For larger retailers, the improved precision makes managing a range of stores less cumbersome. The scholars’ model neatly improves efficiency while permitting better response to consumer demand.

While Mittal and his fellow researchers measured satisfaction of like-minded, neighboring consumers, they noted that their new methodology could apply to shopping scenarios beyond brick and mortar. As shopping moves online, for example, retailers can use this information to make recommendations during live online searches. Their model can also shed light on the tastes of like-minded individuals who live in very different communities.

As the reach of retailers continues to globalize and technologies to evolve, it’s easy to imagine the SDS model helping map regions for drone deliveries. It could also help big retailers spot interpersonal and other links between consumers in given areas. And it could shed light on how and why electoral voting patterns differ across regions and socio-economic groups. 

Adapting marketing and management strategies to specific stores and their customer base can helps ensure that each person who puts in a breakfast order finishes their bacon and eggs (or kale and quinoa) fully satisfied. Satisfied consumers are loyal customers — the secret to long-term success.

Mittal, et al (2017). “Segmentation of Spatially Dependent Geographical Units: Model and Application,” Management Science.

By Peter Rodriguez

Within the walls of academia, research is cherished and revered, the genuine ‘coin of the realm’ for any serious scholar. Outside the walls, research often appears more like a dalliance, the luxurious hobby of the academic’s lifestyle or the abstruse and unproductive exercise of impractical but well-funded scientific minds.

The failure of academic leaders to communicate the fundamental honesty, rigor and power in great research is our most humbling marketing failure. It keeps us up at night. And it keeps the good stuff, the scientific wisdom, the very hard-won stuff, out of reach for so many who really need it. Now, more than ever, the value of science and of proven research and scholarship needs to be smartly and widely shared.

Some like to water down the complexity of scientific studies to make it palatable and less intimidating. But adding sugar to the medicine steals the integrity of scientific processes and turns professors cold to the process. As a result, academics too often seek only their own kind when sharing successful research.

We can do better, by working hard to craft well-written, honest and authentic pieces on the best research done by scholars at Rice. I am immensely proud of the engaging, brief and refreshingly smart pieces that follow in this inaugural print edition of the best of Rice Business Wisdom. There’s nothing more gratifying to a professor than knowing they helped make someone smarter — and through these works on our research, we can.

On behalf of all my colleagues at Rice, and scholars everywhere, I hope you will read, enjoy and share them widely.

-- Dean Peter Rodriguez

Peter Rodriguez is a Professor of Strategic Management and the Dean of the Jones Graduate School of Business at Rice University.

By Phil Shook

After months of public debate, the FCC voted on Thursday, December 14, 2017, to repeal Net Neutrality, the Obama-era rule requiring Internet service providers to treat all Internet data equally, and not charge differently based on user, content, website or similar variables. The decision could transform how millions of Americans get their online information and how much they pay for it.

The vote pitted telecom giants like AT&T and Comcast against powerful tech companies like Facebook and Google as well as consumer and Internet activists.

Spearheading the repeal effort were President Donald Trump and Ajit Pai, his appointee to head the FCC, who argued that repeal would spur Internet growth and innovation, and is essential to a free Internet. It’s a case that AT&T has made for more than a decade. “Why should they be allowed to use my pipes?" Ed Whitacre, the company’s former chairman and CEO, argued in 2005. "The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo or Vonage or anybody to expect to use these pipes free is nuts.”

Repeal opponents, however, argue that ending net neutrality will allow telecoms to levy different rates on different types of Internet communication. It could also make it harder for entrepreneurs to compete with established tech companies, according to critics such as Rice University Engineering School Professor Moshe Vardi, director of the Ken Kennedy Institute for Information Technology.

In the absence of net neutrality, Vardi said, a company like AT&T could decide to raise the price on internet telephony like Skype. “That means that if Moshe Vardi, a Rice professor, wants to launch a service called Vardype, which would compete with Skype, his small company cannot afford the high price demanded by AT&T,” Vardi continued. “So Vardype has to pass the cost to its customers.” Even if Vardype were much better than Skype, Varid said, the inability to draw enough paying customers would force it out of business.

In addition to expecting return on their investment, the telecoms maintain, net neutrality impedes them from investing in new technologies. Repeal critics counter that net neutrality is not merely about “pipes,” or broadband. “If the customer wants a bigger pipe, the customer should have to pay more for it,” Vardi said. “What happens inside that pipe on the Internet highway: That is the business of the customer.”

As of the summer of 2017, a majority of U.S. American consumers appeared to agree. In a national survey of more than 1,000 Americans conducted by Consumer Reports last July, fifty-seven percent of respondents backed net neutrality, 16 percent opposed the rule, and about a quarter had no opinion. A larger majority – 67 percent – said the telecoms shouldn’t be allowed to modify or edit the content that consumers try to access on the Internet.

Meanwhile, economist Hal Singer, an opponent of the original net neutrality rule, warns that simply repealing and depending on courts to protect consumers and competition may not work as intended. Designed to protect consumers and competition, Singer wrote, the legal system is also expensive and slow. “If the net neutrality concern is a loss to edge innovation,” he said, “a slow-paced antitrust court is not the right venue."

Below, some background on how net neutrality works.

What exactly is net neutrality?

Net Neutrality, a term coined by Columbia University media law professor Tim Wu in 2003, is the principle that Internet service providers (ISPs) must treat all data on the Internet the same, without discriminating or charging differently by user, content, website, platform, application, type of attached equipment, or method of communication.

The regulation was an extension of the longstanding concept of a common carrier, originally used to describe the role of telephone systems.

Under net neutrality, the large Internet providers were prevented from requiring customers to pay to get their content delivered more quickly than their rivals, or for throttling other services and websites by block customer access to sites like YouTube or online newspapers.

FCC chairman Pai’s proposal, passed on Thursday, allowed telecom companies to sell customers a basic internet plan that might include only limited access to Google and email. For Facebook and Twitter, for example, a customer may need to pay for a more expensive plan.

The ISPs argued that the common carrier concept, which originally assigned the companies to the same status as utilities, was an outmoded and overly restrictive concept for a modern technology like the Internet.

A little history

The four largest national wireless carriers haven’t always been subject to rules. That changed in 2015. In 2014, former president Barack Obama recommended that the FCC reclassify broadband Internet service as a telecommunications service as a way to preserve net neutrality.

Back then, the FCC received 3.7 million comments supporting the status of the Internet as a telecommunications service. The outpouring of comments pressured the FCC to uphold net neutrality. (This time around, almost 22 million comments have been filed with the U.S. government on the issue although there have been charges that there have been faked submissions in favor of repeal).

In 2015, the FCC ruled in favor of net neutrality. Broadband access was reclassified as a telecommunications service, and Internet service providers had to obey the requirements of common carrier status.

After the Net Neutrality rule took effect later in 2015, United States Telecom Association, an industry trade group, filed a lawsuit against the FCC challenging the rule. A U.S. appeals court upheld the FCC’s Net Neutrality policies by 2-1 the following year.

In 2017, after President Donald Trump took office, his newly appointed FCC commissioner Ajit Pai announced the agency took issue with a ‘utility-style regulatory approach’ to the telecommunication industry’ and would contest the Net Neutrality rule. The agency voted to end the rule in December of 2017.

Down this superhighway before

The big telecoms have violated net neutrality in the past. In 2007, Comcast was caught secretly throttling, or slowing, uploads from peer-to-peer file sharing (P2P) applications. The company continued blocking these applications such as BitTorrent, until the FCC ordered them to stop. AT&T was caught limiting access to FaceTime, so only users who paid for its new shared data plans could access the application. And in July, 2017, Verizon Wireless was accused of throttling after users noticed that videos played on Netflix and YouTube were slower than usual. Verizon said it was conducting “network testing” and that net neutrality rules permit “reasonable network management practices.”

Taking sides

Heavyweights in technology and business have lined up on both sides of the issue.

Supporting repeal of Net Neutrality were such luminaries as Bob Kahn, inventor of TCP/IP, the fundamental communication protocols at the heart of the Internet; Prize-winning economist Gary Becker, the co-founder of Netscape; Marc Andreessen, co-author of Mosaic web browser; Peter Thiel, co-founder and former CEO of PayPal, and Nicholas Negroponte, an architect and founder of the MIT Media Lab.

Among the industry stars and web pioneers supporting Net Neutrality were Tim Berners-Lee, an Oxford University professor and inventor of the World Wide Web; Steve Wozniak, co-founder of Apple Inc., and Vinton Cerf, a Web pioneer who is recognized as ‘the father of Internet.’

Now what?

Even after the December 2017 vote, supporters and detractors of Net Neutrality generally agree on one thing: The decision by FCC commissioner Pai is not likely to be the final word. Lawsuits were already underway within the same week to challenge the FCC’s actions, and the political winds could shift again.