Back to school: executive education in the U.S - business schools

Chief Executive, The, March, 1994 by Peter Lorange

Troubled U.S business schools must pursue partnerships with business if they ar to survive. Businesses must meet them halfway if they want to keep the pipeline filled with management talent.

The way people and organizations learn is changing. As a result, there is a growing recognition that knowledge, the result of learning, and competence in technological and managerial skills are key competitive advantages--perhaps the only sustainable advantages a company can have. Business schools, too, are inching ahead on the learning curve. Even so, many have failed to respond to th needs of their customers--businesses and students. Particularly in the U.S., this has led to declining enrollment and to a more general discussion about the relevance of executive education.

To survive, B-schools must not only work to understand businesses better but to pursue alliances with them and adopt some of their responses to challenging economic conditions, such as leveraging information technology, flattening the management hierarchy, and developing a more global perspective. We believe that the Lausanne, Switzerland-based International Institute for Management Development, begun under a direct partnership with industry, offers a successfu example of such an approach.

Schools that continue to ignore the market mandate to modify their programs ris losing the brightest faculty and students to competition abroad. CEOs must move now to help schools plug the leaks, partly by communicating their business need more clearly. Most would not allow the exodus of competence from their own organizations. They should not consign to this fate the schools they rely upon as a key source of talent.

THINGS TO COME

One driver of change in business schools is demographics: The average MBA student is now in his late 20s or early 30s. He has several years of work experience and thus seeks a curriculum grounded in leadership skills. Many students enroll in part-time programs that allow them to work and attend school simultaneously; or they participate in executive education programs for the sam reasons. The point is that new MBAs are not wet behind the ears; they are often seasoned managers looking to enhance their careers, not to change them.

In 1992, U.S. B-schools minted 75,000 MBAs--most experts believe that number will decline. According to The American Assembly of Collegiate Schools of Business, fewer students are taking the GMAT test. The number of Ph.D.s, too, i declining as business schools retrench because of spending cuts.

One result is that business schools today are fighting tooth and nail to survive. But on the bright side, this competitive environment has made business schools take a hard look at themselves. Some are even hiring outside consultant to evaluate their programs, such as the University of Texas at Austin, which hired McKinsey & Co.

THE EUROPEAN WAY

Even so, one thing seems clear: In a number of ways, European business schools are leading their U.S. counterparts. From 1966 to 1990, the number of schools i Europe jumped from 25 to nearly 300; and enrollment soared from less than 1,000 to nearly 12,000. Some attribute the increase to the policy priorities of local national, and international governments--executive education is seen as a means of reshaping business in some countries, including France. The British government's entrepreneurial initiatives were built on strategic links between businesses and schools.

During the past decade, such partnerships emerged as a key theme in European business education. Some schools, such as IMD, were even begun by industry. Several state-supported schools have moved away from national funding, soliciting involvement of companies and individuals and ceding to them an increased voice in policy. Further, European schools typically are not constrained by faculty who feel that close ties with business muddles the theor they are trying to convey to their students.

European schools also have taken the lead in internationalizing their courses o study, while U.S. institutions have come in for criticism. For example, in its annual survey, "Which MBA?" The Economist recently took Harvard to task for its lack of international emphasis. The magazine's most recent analysis of MBA programs spotlights the subject of "internationalization," concluding that most major U.S. B-schools don't know what it is or how to achieve it. Most define it through an international student body, international faculty, or international course content. IMD, however, says it is an international program that trains managers to recognize, accept, and build on cultural differences, and to work i a free-market, borderless world. It responds to the needs of the global marketplace.

Although not a panacea, internationalization has helped some schools to become more responsive and to revitalize their programs. Witness the fact that Europea business schools are still growing, while the U.S. market is tapped out. Other advantages: Because of their nearness to the vast market that encompasses the former Soviet Union, European schools are in a strong position to begin the Western education of Eastern European managers. The London Business School and France's Institut Europeen d'Administration des Affaires (The European Institut of Business Administration) are both set to appreciably increase their faculties. You can be sure they will be looking at the best and brightest from Europe, Asia, and, of course, the U.S. "The future is in Europe," one European B-school administrator boldly proclaims.