Two alternative strategies for Business Schools and Universities

We talk of business schools in broad terms as if they were globally homogenous. This is what critics of business schools often do. In fact, business schools differ widely across the globe in terms of mission, program portfolio, legal status and economic models. They may form part of professional networks (like the Grandes Ècoles in France, belonging to the Chambers of Commerce), or be independent, like Insead. They may belong to wider universities with ample educational offerings, like most business schools in the US, or be part of small, specialized universities, like the polytechnics of Milan or Zurich in Europe. They may be public and large, like Arizona State University in the US or Rotterdam School of Management in the Netherlands, or be small scale and selective like Dartmouth College and Brown inn the US, Cheung Kong Business School in China or Sabanci University Business School in Turkey.

The business models of academic institutions and how they are funded also vary across the globe. The “Ivy League” institutions in the US are heavily endowed, and the returns coming from their endowments represent a major source of their incomes. In fact, the fund-raising culture developed in the US has created a distinctive economic model of universities that many have tried to replicate elsewhere with mixed results.

Alternatively, in Europe the governments have traditionally been the main financial contributor of most universities. At the same time, a new model of business schools has emerged in Europe in recent decades, their income based on the revenues mainly generated from a diversified mix of educational programs, degree and non-degree. This alternative economic model seems more inspiring and applicable to some emerging economies like the BRIC countries.

 Some business strategists argue that companies should focus only on those industries where they can excel, based on their resources and capabilities. According to this perspective, diversification is not a preferred option for growth unless the newly entered industry is closely related to the company's core business or there are clear synergies to be exploited.

This is also applicable to educational institutions and was very lucidly explained by Professor Peter Lorange, former President of IMD, the Swiss business school: "Strategy means choice, not only in business but also in educational institutes. In the short term, choices that break with tradition may be painful but I firmly believe that in the long term they pay off. Of course, choices must be made consistently and must be based on a clear strategy.” [1]

Under Lorange’s leadership IMD was fundamentally – and successfully -- focused on executive education programs. However, the globalization of education and management education in particular, is challenging traditional paradigms. The global evolution of management education will foster the polarization of business schools' models: on the one extreme of the spectrum, "focused schools", covering only one or two segments of higher education; and on the other end, full-service business schools, offering a wide array of educational activities at all levels on a global scale. Following an idea inspired by Michael Porter proposals, schools that do not choose one of these models will become trapped in the middle and will lose their competitive edge.

The changes to the world of learning also mean that educational providers are adopting different strategies according to their strengths and opportunities. Here, too, the patterns are most apparent with business schools. Business schools first emerged in the United States as centers of post-graduate studies. The model was then exported to Europe, where the majority of business schools that were set up in the 1950s and 1960s, such as Insead and IMD, taught masters programs for executives.

 The graph in the image heading this post illustrates the main programs offered by business schools -and universities at large. Historically, the most popular segment has been masters degree programs, among them MBAs and Masters in Management, the latter being the fastest growing in Europe over recent years.

 Considering the portfolio of programs that business school may offer, they may be classified generically into two types: Vertically-integrated business schools and Focused business schools.

 -Vertically integrated, or full-service business schools, offer every segment of management education, from undergraduate programs to executive education. The best example of this in the United States is Wharton, which offers world-class teaching in all segments. In Europe, examples include Oxford’s Said Business School, Rotterdam, IE Business School or HEC-Paris. Schools that adopt these kinds of strategy may build up a teaching staff made up of a wide range of academics, typically leaders in their field, and whose responsibilities include undertaking research and teaching.

 -Focused business schools, alternatively, concentrate on a particular activity in a bid to become the global leader in their sphere. For example, in the case of IMD, the focus is on Executive Education. The focus can also be on a particular discipline or specialist area of expertise, as in the case of the Centre for Creative Leadership, one of the world’s top schools for leadership programs and coaching. Schools can also seek to set themselves apart through their teaching methodology or learning system, as is the case with a number of the training providers that some years ago explored opportunities out of the Second Life online platform.

Business schools, and universities at large, may choose one of the two alternative strategies described above, but not both at the same time. Which one would suit better the circumstances and the culture of your own educational institution? 

Notes

This post is adapted from a passage in my book "The Learning Curve: How Business Schools SAre Reinventing Education" (London: Palsgrave Macmillan, 2011). 

[1] P. Lorange, ‘Strategy Means Choice’, Deanstalk, 14/10/2005

http://www.deanstalk.net/deanstalk/2005/10/management_educ_1.html