Smart Questions To Ask MBA Alumni

Time for Business Schools to Unbundle Their Offering?

Growing up, Burger King would run television spots with the tagline, “Have it your way.” Back then, it was a radical departure from the traditional marketing model, which revolved around Henry Ford’s dictum, “You can have a Ford in any color you want, as long as it is black.”

Many business schools still operate with a similar model. This is particularly true of executive education programs, often the cash cow of business schools. For a lump sum, professionals get all the amenities, the gold-plated Cadillac offering. But is that really what every executive needs? With new services and delivery methods emerging from non-traditional players, can business schools sustain an exclusively “bundled” product? Or, will they need to pivot and embrace a pick-and-choose model?

That’s the fascinating question raised by James Henderson, a professor of strategic management at IMD. In a Financial Times essay, Henderson doesn’t hold back when it comes to the need for executive education programs to adapt:

“Business schools are great at telling executives how to cope with disruptive technologies and business models, but are less good at dealing with these challenges themselves. Now they have little choice.”

For Henderson, business programs risk becoming expensive, time-consuming dinosaurs compared to their more nimble competitors:

“Many companies offer large-scale assessment services to help executives benchmark themselves against their peers. Executives can take a massive open online course (Mooc) and get fresh content for free. They can go to a consulting firm and take online programmes or workshops with coaches. Executive coaches offer further options. Finally, several social network providers offer alumni networking services that may be much better than those provided by business schools themselves.”

The solution, in his view, is to unbundle such services, no different from how the telecommunications, computer, and airline industries have done over the past decades.

Here is how Henderson envisions this model unfolding:

“These unbundled options might include an index for executives to assess their leadership capabilities or their levels of responsibility relative to peers; online programmes providing new content; face-to-face programmes involving more interaction with other executives and deep application to their own leadership challenges; personal executive coaching (online and face-to-face); and finally high-powered online tools to help them improve their networks. Instead of a traditional bundled “take it or leave it” option, executives can take an à la carteapproach and choose what they want.”

While this approach may seem reasonable in theory, Henderson concedes that it is certain to face institutional resistance from research-driven, tenured faculty. At the same time, he argues that this ossified bundled model will inevitably choke out many executive education programs:

“Most if not all business schools are taking the traditional bundled option, relying on great research, tenured professors and a stellar brand name to attract top executives…

This bundled approach is likely to persist, not least because tenure-track professors would rather focus on research than work closely with executives. However, the risk for bundled schools is that their best professors bypass the classroom and go directly to MOOCs and other online outlets (such as TED talks) to seek greater fame and fortune. We have already started to witness the creation of star professors through this mechanism. Their speaking fees increase and consulting opportunities improve, while business schools idly watch as their ‘reputations’ apparently benefit.

The problem is that such schools must now search for star faculty to maintain or improve their reputations. As a result, recruitment costs inevitably increase. Little wonder, then, that the size of fundraising campaigns for business schools is very large – from €100m to several billion. Only a few schools will be able to continue playing this game in the medium to long term.”

In other words, executive programs must return to their roots, emphasizing teaching over research and focusing on the customer (the professional) to build their brand. Sounds like a plan. But you know what they say about plans? In the words of performance guru Mike Tyson, “Everyone has a plan…’til they get punched in the mouth.”

Let the unbundling begin…

Don’t Miss:  Poets&Quants’ 2014 Ranking of the Best Executive MBA Programs

Source: Financial Times