Executive education with B-Schools

Traditionally most business schools have shied away from exclusive arrangements with corporate companies. But the fact that Thunderbird is doing this now signals that there is a larger trend in the offing. B-schools are stepping up their focus on executive education and particularly custom-tailored programs for Companies.

While most schools will still not offer a full-time MBA specifically tailored for a single company, they are witnessing a boom in short term custom programs. Associate dean (executive education), London Business School, says that custom programs have doubled in the size in the last three years and revenues from them have grown from 10 million pounds to 15 million pounds.

In fact, 80% of Kenan Flagler’s executive education programs are customized today while two-thirds of Darden’s programs are company specific. In India too IIM- Ahmedabad recently tied up with Duke University’s Corporate Education arm to offer custom programs in India and west Asia. A study by UNICON, the International University Consortium for Executive Education has revealed that more than half of executive education is now customized, as opposed to the traditional open enrollment courses. The trend in this direction has been going on for many years.

Many firms use executive education to help implement their strategies successfully. For example, if an organization places strategic emphasis on innovation, they might create an executive education initiative around innovation. Creating such a program ensures that executives have the skills they need to implement the new strategy. Apart from that as businesses go global there is a greater need to build capabilities and understand different geographies says a CEO of Executive education at Darden. They find helping clients understand the India and China better both as markets as sources of clients, suppliers and the cultures of fellow managers.

Most MBA programs lose money with this budget gap closed by combination of interest on endowment, annual giving from alumni and contribution from executive education Executive education is undoubtedly the bigger revenue grosser for most schools compared to regular fulltime programs. And as far as customer programs go, schools can charge a higher fee differential there. Executive education accounts for nearly 23% of Harvard Business School’s revenue whereas the full time MBA accounts for just 21%. At other schools the difference is more. Thunderbird, for instance, had about 14% or $7 million of its revenues coming from corporate learning in 2001-01. In 2006-07 the projected revenue from the same segment has grown to 39% or $23.2 million. Faculty benefits from interacting with participants on the close-to-practice issues that are at the core of research and course development agenda. Executive education has a very demanding customer so that helps to build our capabilities as a school and innovate in these short programs. Some of these ideas, tested in the real world, flow back into the full time MBA.

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