When Yasirah Sakadavan launched a management programme for her colleagues at Absa, the South African financial services company, she harboured a secret ambition: that the programme, though designed for a South African audience, might be taught to the bank’s managers across Africa. “We wanted a programme with long-term sustainability that would make a contribution to the continent,” she says.
However, the human resources specialist did not envisage that Barclays, Absa’s parent company, would like the programme so much they would take it global. Although the pilot started small in South Africa last November, with just 33 managers, by the end of this year it will be taught in 13 African countries. In 2013, the programme will be extended to Barclays’ executives in Europe and beyond.
The extraordinary economic growth in developing economies means they are often leading the way in programme commissioning – as in the case of Absa. The result is that, after a three-year hiatus, business schools are now clawing back business from cash-rich corporations and are rebuilding their portfolio of programmes.
In Europe, Spain’s Esade school has seen business increase 10 per cent in the past year, with growth coming largely from Latin America, while at London Business School Sabine Vinck, associate dean for executive education, reports: “We’re delivering more of our programmes in China, India and the Middle East.”
In India, demand for executive programmes is growing rapidly, says Deepak Chandra, deputy dean of the Indian School of Business in Hyderabad. “The rate of economic growth requires high-quality talent. The availability of quality education in the past was not adequate.”
Even in the US, where executive programmes have traditionally been delivered locally, it is a similar story. Mike Malefakis, associate dean for executive education at Columbia Business School, reports that up to 65 per cent of the school’s executive business is from outside the US, with growth driven by countries such as Brazil and China. “I think there was a period when the larger US schools were a little behind the game. We were adapting MBA teaching for executive education. Now we understand we have to be much more proactive. The challenge is how we get ahead of the game.”
Duke Corporate Education – which designed the Absa programme – has seen growth of 30 per cent over the past year, with 50 per cent of new business coming from outside the traditional regions of the US and Europe, says Mike Canning, the chief executive. “We’re growing fast in Asia and Africa. It is not only that there is hope there, but there is an economic underpinning.”
While business has come back across the sector – though Canning admits that for Duke CE it will be another year before the “glory days” return – it has come back in a different way. Competition is increasing from unlikely sources, as non-governmental organisations and publishing companies join management consultancies and corporate universities in taking on business schools, all desperate for a slice of the action.
There is also increasing competition from business schools in the emerging markets, says Malefakis.
“Emerging market schools are qualitatively different from three or four years ago. There are wonderful schools in China and Brazil that are going to be true competition. I think a lot of US schools did not understand how fast this could happen. Much of the innovation is coming from emerging markets,” he says.
The result is an extraordinary fragmentation, says Vinck. “None of us has more than a 0.5 per cent share of the market. What we all have to be clear about is our identity.”
While some providers have clear identities, such as Duke CE, which specialises in company programmes, or the Center for Creative Leadership, which focuses on just one sector of the market, many business schools are struggling to find their niche as they juggle degree and non-degree programmes.
In Switzerland, Dominique Turpin, president of IMD, believes his school is increasingly clear about its role. “IMD is trying to position itself as a specialist in global executive education,” he says. It has recently opened an office in Singapore and has plans to open two more in Rio de Janeiro and Beijing.
Not only do clients come from different regions of the world, they now come from different sectors as well. Two particular growth areas in developing economies are government and state-owned enterprises. Canada’s Ivey school at the University of Western Ontario, for example, ran a year-long programme for the Agricultural Bank of China. “They’re very eager about doing business in the western way,” says Carol Stephenson, the dean.
Other schools, such as Ashridge in the UK, are also seeing government business grow globally. At ISB in Hyderabad, 30 per cent of the $12m-$13m of annual business is with the government. The school has recently signed a partnership deal with the Institute of Business Administration (IBA) in Karachi for open-enrolment and customised programmes to be taught in Pakistan, to support the thawing relationship between the governments of the two countries. “This relationship is our first and small step to align us with this objective,” says Prof Chandra.
Open-enrolment programmes are also making a comeback at schools such as Ivey and Wharton. “The trend to customised education has now reversed,” says Thomas Robertson, dean of the Wharton school at the University of Pennsylvania. While only 35 per cent of Wharton’s business used to be open-enrolment programmes, that has now risen to 45 per cent.
Others, such as Prof Turpin at IMD, believe the distinction between open-enrolment programmes and customised ones is disappearing. “In terms of marketing and sales we make this distinction less and less.”
The Absa programme in South Africa highlights a further trend: the need to train middle managers – tomorrow’s top executives. HR specialist Sakadavan believes this move is inevitable. “Programmes used to focus very heavily on their executives and on female leadership. There was a real need to develop something for the needs of middle managers.” After all, she adds, “Leaders are becoming younger and younger.”