Business schools vs management consultancies

The past year has seen a sea change in the way corporations view executive education. These days the focus is on how companies can use business schools to improve the running of their organisations, rather than the teaching of blue sky theories. As a result business schools have to develop new skills to survive in this increasingly competitive world.

When should companies choose open enrolment programmes and when should they opt for a customised approach? What can business schools offer that management consultancies cannot? What does it all cost and how can a company measure its return on investment?

On the panel are:

Peter Degnan, executive director of Wharton Executive Education at the University of Pennsylvania.

Bob Stilliard, chair of Unicon, the International University Consortium for Executive Education, and director of executive education at Ashridge, in the UK.

Della Bradshaw, Business Education Editor, Financial Times.

Our panel of experts answer your questions on executive short courses.

............................................................................................................................................

Have there been podcasts used successfully as a technology within the executive education area? They have been used in universities – but has there been any evidence of this technology being used by the slightly older exec education target population?
David Cassini Backstrom, UK

Peter Degnan: Wharton uses this forum a great deal in our ExEd programmes as well as in the broader distribution of faculty research and the discussion of current business issues via Knowledge@Wharton. These have been very well received and we would expect further use of them in the future.

Della Bradshaw: I don’t know of any, but I can’t help thinking that podcasts may soon eat away at the bottom end of the executive education market, where the emphasis is on skills training, rather than education and development, and where participants are younger and at the lower end of the career ladder.

I certainly know of cases where podcasts have been used in MBA programmes, where professors are filmed and then the programme distributed to students – HEC Paris does this. It has proven particularly useful for participants who want to watch the lecture again – those who don’t speak English as a first language, for example. I could see this proving useful in executive education too.

Bob Stilliard: We are increasingly seeing demand for podcasts to supplement Ashridge’s other virtual learning output. We expect more use of this technology in practice as younger managers move into the executive population.

............................................................................................................................................

There is a lot of talk these days about personal coaching. Does the panel think it is the role of a business school to be involved in coaching?

Della Bradshaw: There are clearly a lot of coaching companies that do this kind of job. However, my understanding when talking to business schools is that clients on customised programmes are increasingly asking for personal coaching – often for the top executives – as a follow-up from the more traditional programme. So, given that the school has developed and in-depth knowledge of the strategy of the school, and the personality and style of the top team, this may be an economical way of continuing.

Bob Stilliard: In short yes. If the mission of the school is to enhance the performance of the individual executive then it is important for them to be able to see learning in action in the executive’s workplace. This is where executive coaching can really pay off in helping the organisation achieve a good return on it’s investment. Incidentally, there are good opportunities for applied research from this activity. From a supply view point there will probably need to be different staff in involved in coaching than in the initial education experience and this is sometimes a challenge for the traditional business school.

Peter Degnan: Wharton is seeing a rise in the number of clients looking to incorporate coaching into the overall design of the ExEd programme. In order to make the programme highly relevant to the company, action learning is becoming increasing used to tie the content to real-life business challenges. Typically coaches are introduced in order to assist the teams charged with these problems and facilitate the teams ability to work together while also helping identifying individual strengths and weaknesses. This has been a very powerful and impactful approach to ExEd.

............................................................................................................................................

When selecting an executive programme, must distinction in research be taken into account?
Erick Deister, Switzerland

Peter Degnan: Assuming you are talking about the distinction in research on the part of the faculty and the school then I think that is a very important consideration. ExEd programmes are only as good as how connected they are to the business world in dealing with current problems and challenges.

Faculty must be well versed in understanding these problems and have a solid foundation in the business world. Faculty at Wharton spend a lot of time with business leaders and study various companies and industries in order to be on the cutting edge of applying new business theory to practical business problems.

Della Bradshaw: ”Must” is a very strong word. I think there are really two questions here. The first is, the type of research a school undertakes. The second is the extent to which knowledge transfer, rather than personal development or strategy development, is the order of the day. If you are studying on a short finance programme, for example, then the financial knowledge of the professor, reflected in the extent of his or her contemporary research, would clearly be an issue – just as it would be on an MBA programme. But for other types of programmes, particularly customised programmes, this might be less relevant.

And there are lots of different types of research. Wharton, for example, is one school that prides itself on its publication rate in top academic journals. Ashridge on the other hand takes a practitioner based approach, centred on how companies operate. Which is more appropriate for executive education programmes? I will let my two fellow panelists fight it out!

Bob Stilliard: The key here is relevance. If the programme is built around a specific piece of research then clearly the buyer is going to be looking for excellence in research. However, in many circumstances participants on executive programmes are looking to have research from a wide range of sources distilled into practical relevant help for their organisational roles. In this circumstance it is much more important to have distinction in teaching, facilitation and the design of learning interventions than in research.

............................................................................................................................................

What do you see as the key emerging trends in executive education from both a demand and supply side in the UK and globally? How would you characterise the level of innovation, creativity and learning methodologies presently offered by UK universities in this field? How far do you think emerging approaches led by psychology or anthropology might replace more traditional ‘MBA’ style offers based on organisational theory?
Sarah Yorke, Kent Enterprise, Canterbury

Peter Degnan: From a global perspective, we are seeing significant growth in the need for leadership training, particularly in developing countries, and a better understanding of western business practices. Many international schools are now trying to partner with schools in the US and Europe in order to achieve these objectives.

Della Bradshaw: What a great question. I think one of the things that I see as heartening in the UK is the growing belief that management education can actually help businesses perform better. This is not just at the degree (MBA/MSc) level, but at executive level as well. I guess this is because a growing number of the ”C suite” in UK companies have MBA degrees but I think it is also because the UK in general, and London in particular, has become a hub for international companies.

So, growing demand for companies based in the UK - but not necessarily for programmes from UK business schools. Many of the top US business schools, such as Wharton, have blue chip clients based in the UK. But with this growing market comes a more sophisticated consumer, who is more demanding on issues such as performance and relevance.

I am not sure the psychological and anthropological approach you mention is particularly new: a list of the faculty a many top business schools – Stanford springs to mind in particular – have faculty that started life in psychology departments. I think one of the things that has proven interesting though is the growing demand for programmes that include socio-politics and cultural awareness. In the UK in particular the London School of Economics has found a ready market for executive programmes along these lines. But you are obviously an academic yourself. What do you think?

Bob Stilliard: One key trend is the increasing intensity of demand for customisation to clients’ requirements. Clients are becoming more and more sophisticated in their understanding of the way executives learn and want closer involvement in the design and development of learning experiences. They want to draw from a much broader range of learning methodologies beyond the classroom and increasingly insist on a very high degree of relevance.

Alongside this, much of the innovation being delivered by business schools is being driven by the demand from clients themselves and it is impossible to exist as a business school without being able to respond to this demand for innovation. As for content, topics surrounding leadership, particularly in a global and virtual context, are becoming more important for clients. Aligned with this trend is the increasing presence of diversity both within the process of design and as a content subject.

Sarah Yorke: Fascinated by your thoughts on the need for leadership training and a better understanding of western business practices in developing countries – or should we be seeking to understand business practices in developing countries ourselves – as they will be the dominant economies within the next ten years!

............................................................................................................................................

As a HR director, how do I justify the high cost of executive education programmes to my board?

Peter Degnan: If in terms of a custom programme, on a per person basis (assuming a typical class size of between 30-40) the cost is not really that expensive and the real key factor is being able to measure the impact the programme has by tracking what the participants do when they return to their jobs. You must look at both parts of the equation in order to justify the upfront expense. Our clients’ experience so far indicates that the positive results achieved by the programme more than offset the cost.

Secondly, it is important the board understands that an ExEd programme is not just a bunch of interesting academic theories, but a tool used to positively affect the business and to help the participants become more successful in applying new learning and ideas to real life problems and issues.

Bob Stilliard: The key issue here is impact. It is critical for the board to be clear about and to support the change in the organisation or the individual that is being addressed by executive education, and to have a mechanism that can prove whether the desired change is being achieved.

Research that we recently conducted among clients concluded that most senior executives believe that an objective measure of ROI on executive education is often not possible. Most in fact believed that where there was clear evidence that individuals had benefited from a programme, that in itself was proof of a positive return from the investment. The conclusions for HR directors was that they should focus more on building a shared understanding within the board of the purpose of any major executive education intervention well before it is launched, and to involve them in the assessment process of its success.

Della Bradshaw: I suspect that if your board needs you to justify the cost of the programme then there is something wrong with the course. Perhaps you should try to get the board to say what they would see as suitable justification – improved income, business growth, successful intervention overseas, reduction in head count, successful succession planning – and try and develop or select courses that achieve that.

............................................................................................................................................

There is some mention made in the Financial Times survey of the relative costs of open enrolment and customised programmes. I would like to ask the panel when they would recommend looking for a tailored programme and when they would recommend a series of open enrolment programmes?

Peter Degnan: Open enrolment courses focus on building strengths for individuals or small teams while custom programs are best used to build strength in larger teams and divisions focusing on a business context.

Bob Stilliard: Tailored programmes are best suited to organisations with a development need for a large number of executives, particularly when the benefit of the level of diversity that comes with open programmes can be provided from within the organisation. Organisational change initiatives are often driven via executive education and tailored programmes are also suitable here. Open programmes are more of an individual decision, and often driven by the need to get fresh thinking by exposure to the diverse set of participants on this type of programme.

Della Bradshaw: Open enrolment courses are great for developing individual managers, personally and professionally, and for developing networks. Customised programmes are brilliant for helping companies implement strategy through educating their executives.

............................................................................................................................................

As the owner and managing director of a small media company I think I could learn a lot from studying at business school, but I have two questions. First, are courses available that target privately-owned small businesses? And second, are they delivered in a format that means I do do not leave the office for long periods of time?

Peter Degnan: Yes there are programmes that help owners/managers of privately owned small businesses and most ExEd programmes are normally between three and five days.

Bob Stilliard: Many schools are now providing programmes of only a few days in length, and some offer one-day masterclasses on very specific topics. The provision of work-based development through action learning groups and on-site coaching also helps to avoid long periods away. Some schools such as the Durham University Business School have research centres devoted to small businesses and deliver programmes targeted at the sector.

Della Bradshaw: On your first question, yes there are a lot of courses designed for small entrepreneurial companies. There are also some schools that specialise in the management of family businesses – these tend to be in countries such as Spain or Italy where a relatively high proportion of GDP is earned by family-owned companies.

On the second part of your question, I think every business school has become much more aware in recent years of the time constraints for modern managers. Not only are programmes getting shorter but schools are using a lot of internet-based tools for doing some of the basics. This often happens during the course. So, a one-week programme, which would have previously been taught on five consecutive days, might well be taught over a four month period, with online exercises and projects between the five days of face-to-face coursework.

............................................................................................................................................

How can I identify an appropriate exec-ed course, open or custom, without visiting all the different schools websites? MBA programs are well researched, is there anything for exec-ed that identifies similar courses provided at different schools, or indicates which schools are strong in which topic areas?
Tom Burnet, UK

Peter Degnan: There are actually a few firms that specialise in researching the various ExEd schools and service providers and can help you determine what might be the best fit for you and your organisation. I can’t comment on the quality or reputation of such firms, but I have recently come across one that does this and might be able to help. The firm is called Bersin & Associates.

Bob Stilliard: There are publications that draw together in one place all of the major school offerings. One that has just been published is the Executive Education Handbook from IEDP.info. Of course once you have narrowed down your search, there is no substitute to visiting the schools and getting a flavour of the learning culture, so that you ensure it is a good fit, particularly if your investment is significant.

Della Bradshaw: There are a couple of books and websites out there, but no one definitive source. They also tend to be advertising led, so that the business schools pay for inclusion, which means it is not a complete list. Interestingly, this is a topic about which I get a lot of enquiries.

............................................................................................................................................

There is an intense competition between business schools, and the strategy that some of them are adopting to differentiate from the rest is by providing sport management education. Should business schools offer sport management open programmes or customised?
Jose Gigante, London

Peter Degnan: Wharton currently runs a programme for the NFL that helps the athletes prepare for a career outside of sports. In terms of general sport management programmes, it depends on the market requirements if there is sufficient demand for an open enrolment programme.

Bob Stilliard: Whether business schools should run sector specific programmes depends on the market demand from that sector. In the case of sport, the worlds of business and sport can learn a great deal from one another. Ashridge is integrating lessons from the sport, especially relating to coaching, into both its open and custom programmes, building on its experience of working with various Olympic coaches, England Rugby, Welsh Rugby and a host of professional cricket teams. Drawing in different lessons and experiences from other disciplines such as sport or the arts, can be highly effective for the management development of business people.

Della Bradshaw: I’m not sure whether your question means should business schools should run sports management programmes at all, or, if they do, whether they should be open enrolment or customised. The answer to the first is a definite yes. Sport these days is a business like everything else. As to whether customised or open enrolment, I think the answer to that is the same as for any other industry. If it is a football club or sports company that wants to develop its own strategy to differentiate itself from its competitors, then a customised programme would be appropriate.

However, there are issues that are applicable across the sporting industry – branding is probably the most obvious. Clearly that would be a case for open enrolment programmes. I think there may also be a case for consortium programmes here, or affinity groups. That is, where a group of companies with similar interests get together to commission a programme between them. With the UK looking forward to the Olympic Games in 2012, you can imagine there might well be room for this kind of programme related to the management of large projects, international marketing etc.

............................................................................................................................................

Succession planning and building a strong executive bench are a top priority development area for all organisations with the changes in demographics (baby boomers retiring and a shrinking pool of younger managers). Are there any research studies to show that executives are more likely to stay with their organisations after attending open enrolment executive education programmes?
David Parks

Peter Degnan: I don’t have any specific research at my finger tips, but I have read that employers who provide an atmosphere and environment that encourages individual learning and career development, have a very positive impact on staff morale and retention.

Bob Stilliard: Increasingly, executives regard support for their own development as an important criterion in their selection of organisations in which they want to work. So, in a general sense, development-friendly organisations will attract stronger candidates, and it seems reasonable to assume that executives will be retained for longer as a result. I am not aware of a piece of research that specifically focuses on open programmes but my own experience of working with open programme participants tells me that a vast majority hold their organisation is a higher regard as a result of their selection for the programme.

Della Bradshaw: I don’t know of any.

............................................................................................................................................

What is the difference in ROI for me if I take an MBA or I take two or three short exec-ed courses?
Ding Luo, Shanghai

Peter Degnan: Quite a big difference between the two experiences and, Ultimately, it depends on your own objectives and time commitment. Both can have a very high impact on your career and professional development.

Bob Stilliard: These are very different paths. Both will give you increased competence and confidence but you need to make decisions on a number of questions: how important a formal qualification is to you; how much of your personal time you can devote to your business education; whether you have a broad need for skill development or a more focused one and so on. In terms of ROI although there is plenty of information on salaries pre and post MBA, the same cannot be said of shorter executive courses and it is probably more important to concentrate on getting the right answers to the qualitative questions rather than attempt to do a financial comparison between the two.

Della Bradshaw: That’s a really difficult one. The biggest cost of studying for an MBA is not the course fees but the opportunity cost: the salary you WON’T earn during the one or two years you are studying for your programme. A part-time or an Executive MBA (studying while working) would obviously reduce that expense. My worry, though, is that the reason for studying for an MBA or for executive courses should not be based on an ROI calculation. It’s a decision that should be taken on the basis of where you are in your career or where you want to go. For example, if you are an IT manager or engineer, and you want to move into general management, possibly in a different sector, then an MBA is great. But if you just want to fill in a bit of knowledge you don’t have then a short programme would work well – finance for non-financial managers for example. How well you progress in your career (and that is what will determine your salary and therefore the ROI) will be decided by how appropriate your knowledge and qualifications are to the career you want to follow.

Background reading

Business education