The past few years have seen a change in the vocabulary used by business schools to describe executive education. Contracts have been replaced by “relationships” and courses by “strategic development”. The coming year will test whether this is just a lot of hot air. As the major economies head into economic downturn, will corporations see management development as a way of beating recession or as an expense they need to cut?
On May 14, a panel of experts answered your questions on executive education on FT.com. They were David Newkirk, chief executive for executive education at the University of Virginia’s Darden graduate school of business and formerly a senior vice president of Booz Allen, the leading technology and consulting firm; Ian Hardie, group international training director at luxury goods company LVMH and former boss of executive education at London Business School; and Della Bradshaw, business education editor at the Financial Times.
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?
Do you think that US and European business schools have the capability to respond to the constantly changing requirements in executive education programs or will they become fat old behemoths unable to race with the Asian slim tigers in the process of global competition for young executive talent?
Viktor O Ledenyov, Ukraine
Ian Hardie: Yes and no!
We already see significant changes in the established schools and this will continue - Schools know they need to be innovative and meet client needs. Different schools will cover different segments and use different approaches - some will develop overseas campuses; others will develop partnerships and others will focus on the US and Europe - still pretty big markets despite the great Asian growth!
Equally can the Asian schools meet local demands or even penetrate the US or Europe? There will be winners and losers but overall I think the top schools are now - they weren’t 10 years ago - alert to the global market and the needs of business. Given the growth of Russia it will be interesting to see how their start up schools develop and could they be the new challengers for business in Asia. All schools irrespective of region will need faculty who can meet the new needs - that is probably the single biggest challenge.
David Newkirk: Management education was pioneered over a century ago in the US, and the bulk of the top resources (faculty, facilities) are still here. The European Schools are much younger. London and INSEAD roughly 40 and 50 years old respectively. In recent decades, we’ve seen the European schools rise up the rankings, first serving local markets then, at the highest level, competing for global talent. However they have not displaced all the US institutions, nor do they seem to have the fundamental advantages in structure or resource cost that typically fuels an Asian tiger (there is a global market in business faculty, so low cost labour is not a sustainable advantage). We would expect to see some top quality schools emerge in developing markets to serve the growing local demand for management education. And some, probably beginning with the Indian School of Business, will rise up the rankings as well.
Like any institution, a business school can resist change. And the realities of faculty could make the challenge even greater. However, there are signs that the established schools may be able to respond and adapt.
At the MBA level, we’ve seen major redesigns at Yale and Stanford, and continuous change at other institutions. We’re also seeing schools globalize -- with INSEAD Singapore and Duke Corporate Education the most visible examples. And the schools have massive financial resources from $1billion endowment at Stanford to nearly $3billion at Harvard. This is funding an ’arms race’ in facilities, faculty and resources that the developing market schools will find a challenge to match.
In executive education, we are constantly refining our offerings (Della Bradshaw’s cover article in Monday’s supplement described this well). Because we sell directly to our clients every day, I hope we’re less likely to lose touch with market requirements. And because we use a mix of full time and adjunct faculty, we’re not bound by the capabilities of the school’s full time staff.
There is a huge demand for management education. Most of it will be met on a local-for-local basis. The top end will quickly become a global market. Education is in many ways like a professional service business. We’ve seen the leading law firms, investment banks and consulting firms globalize to meet global demand, adapting to meet requirements rather than losing to ’slim’ upstarts. Perhaps that’s our future.
Della Bradshaw: I don’t think the competition to European and US business schools is coming only from Asia but also from Central and South America - Brazil, for example - and also from other countries which are changing very quickly - South Africa and Russia spring to mind. I think there is a particular challenge for business schools working in these areas where there is such rapid change and it is an even bigger challenge for US and European business schools to enter those markets. And let’s face it, with the economic slowdown in the US and Europe, the Bric countries are a huge potential source of revenues for the more established business schools.
Did you find out if there are any particular open enrolment programmes which business is particularly keen on ?
Mark McCartney, Cranfield School of Management
Ian Hardie: I think in general terms the areas of focus are in 3 main areas - core capability - Strategy, Leadership and Finance with Leadership the most sought after. Secondly General Management - in many cases as an alternate to an MBA with broad and range of topics and finally topical - issues - collaboration, managing in a down turn; I think business schools find the latest the hardest to address.
Market research is used widely in business in b to b and b to c markets - it is used less often across schools but I feel the right investment can pay off as too often we think about the client needs in terms of faculty interests/expertise or our own market perceptions when perhaps there is a bigger accessible market we are not aware of - I would invest some of your marketing budget to find out rather than hoping you are promoting the right programmes to the right clients.
David Newkirk: While it would be inappropriate for me to comment on specific programs or schools, we are observing some patterns in our own demand. The demand for multi-week, senior general management programs seems to have stabilized, with a group of companies continuing to use them to give rising executives the breadth of vision necessary for the boardroom. In the US, the market for ’core skills’ seems to be declining, as more managers already have MBAs, with the exception of ’Finance for the non-Financial Executive’ which enjoys continuing demand. Personal leadership is in constant demand, in various forms. In recent years, operations and change have lost ground to growth and innovation (we’ve yet to see what the recent economic outlook will do to this.) There is a growing interest in ’hot topics’, exploring current research and trends. However this is often met by industry associations and consultancies.
I run my own media operation and am keen to develop my finance and management skills. Would a business school education help me? Are there any courses which are available tailored to me? If so, could I do distance learning so that I do not have to leave the office for long periods?
David Newkirk: There are some distance learning tools available. However, they are best for developing basic literacy (including finance) transmitting specific content knowledge and refining technical skills (accounting, modeling, etc.). Management, and even more leadership, is best developed by practice, informed by theory. If you’re really looking to improve your management judgement and strategic sense, you would do well to use a series of short, topic oriented programs. In addition to the direct value of more effective learning of what is essentially a set of behaviours, there is real advantage to the interaction with peers – observing their different styles and sharing perspectives. With that as a foundation, you can then extend your development with distance learning programs
I’m not aware of any programs that address media operations specifically. You might do well to search on-line. However, in our experience at Darden, the fundamental issues of management are relatively common, and the breadth of perspectives in the room enhances the learning, so you would do well to find a high quality general program.
Ian Hardie: I am sure a spell at business school will help - it will provide access to sound ideas and frameworks which you can consider and implement in your business. You will develop skills and techniques as well as hopefully some insight into your current capability. You will also gain from the interaction with the other participants and hopefully a longer term relationship with the school. However you need to pick the right school - criteria seem to be; location if time away is an issue - can you find a part time programme or a short course. Quality of the school is key - are your needs ”basic or foundational” so find a fit; do you need a school with media interests - if possible pick a core programme at a school which has media connections. Finally try to think about your learning style/approach and see if you ”feel” the school l and its approach are a match - this is subjective. These criteria are not necessarily in priority order!
The web make sit so much easier, narrow down your short-list and make some calls - choose the course as carefully as you would a supplier who is also asking for your time and money - good luck You can try google or www.iedp.org, or UNICON at www.execed.ie.edu or just the FT Rankings!
Executive education is not only done in business schools. Therefore I would love to see a list or a ranking of independent consulting/education companies in Europe or globally. Is there anything that you could point me to, where I can find more about this subject?
Dagmar Doring de Riva, France
Della Bradshaw: I think the problem is that this would be an incredibly long list and many suppliers would be very local.
That said, many of the enquiries I get at the FT are from people who want to know where to find specific types of executive programmes - short courses in treasury management, internet marketing etc etc And this only relates programmes at business schools, never mind consultancy and training companies. So, there is clearly a need out there for some kind of directory..
Ian Hardie: The challenge is the variety of organisations out there; it will be very difficult to ”rank” providers of completely different shapes, sizes and areas of focus. We already see some issues in the FT Business School rankings where one is trying to compare Global and local/regional Schools.
I am not aware of another ranking but I would advise to use your network - everyone is always willing to tell about good providers and even more keen to tell about bad experiences. However you need to be very clear on your criteria - value for money versus branded ; international versus local, practical versus academic etc.
David Newkirk: Good question, no easy answer. Companies use a range of solutions from in-house resources (typical of the big professional services firms), to contracting with individual faculty (as GE famously does at Crotonville). But you’re right that there are groups emerging that focus specifically on executive education (American Management Association, Center for Creative Leadership, and any number of specialized training houses). We are also beginning to see the major outsourcers provide turnkey solutions (for example, Accenture and PDI in Europe). I don’t believe there is any formal ranking of them.
What is the main challenge in executive education in developed countries during a period of recession? Please explain it from business school and industry points of view.
Viktor O. Ledenyov, Ukraine
Della Bradshaw: Being cynical by nature, I would say the main clhallenge for business schools is persuading companies to buy their wares. For industry it has to be how to measure return on investment, which is always important but even more so when budgets are squeezed.
David Newkirk: From a company’s point of view, the strategic challenge of a recession is to take advantage of the opportunities it creates. A downturn is often the best time to reposition a business and gain share.
Resources and capacity are available, traditional supply relationships are in turmoil, and clients are looking to gain advantage. There’s also an increased openness to change. This means the education needs to reinforce the underlying vision and strategy, while encouraging experimentation. Also companies need to ensure their managers are making good decisions quickly, on a solid basis, emphasising the need for financial and analytical tools. And leadership is critical in up and down markets.
For a school, we feel much the same pressures. Clients are making decisions on shorter lead times, they are looking for immediate impact on the business. We’re rebalancing our portfolio slightly, and marketing harder. But we’re seeing the impact vary widely across sectors – housing and consumer companies are down, as is wall street. Aerospace, defence, and consumer financial businesses continue to be strong performers.
Ian Hardie: Executive education is an investment in your people. Like any investment it needs to be carefully assessed and the context - economic situation, talent availability etc needs to be taken into account. The assessment or decision needs to be taken in light of both a short term and longer term point of view.
From a business school view I feel one needs to do 2 big things - firstly go back to basics - in terms of the core programmes and the core processes in place to ensure you are able to maintain a strong connection with your current customers. Secondly the ”challenge” of a downturn presents an opportunity - look for where you can provide programmes or topics that are relevant in a format that is relevant. Look to see which areas of market share you can gain - maybe other schools exit segments and you can take their clients. I do think you have to try to play both games and ride out the storm; its like growing roses if you get your pruning right the plant comes back with bigger and better growth in the future.
From a company perspective the challenge is that if budgets are tight you need to be even more selective in terms of which programmes or schools you use and selective in terms of who goes to programmes. Custom programmes can be a major investment but stopping them and trying to restart them is also a huge cost and has negative impact in the medium to long term Like the schools companies need to be sure they are not over doing their reaction - many employees remember training budget cuts longer than they recall reduced bonuses. Executive education is for capability building, reward and retention and in tough times you need to make sure you are not making a short term decision and losing out retention or capability wise in 2 - 3 years.