Student power disrupts business school model

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It is a sign of the intense competition on business schools that students can now fire their teachers, writes Dominique Turpin, the President of Switzerland’s IMB Business School, which is regularly ranked in the world’s top ten

“Business schools’ customers face tough competition and disruption every day. Why should our industry be any different?” Dominique Turpin, IMD President

Recently I spoke with a student who was trying out three online marketing courses with different business schools. I asked what she thought about the courses. “Well, to be honest, after a couple of sessions I got bored, so I just fired two professors,” she said.

 

Okay, she did not literally kick them out of their jobs – she just stopped looking at their online material. But her story highlights some of the biggest forces shaking up business education: Increasing competition, online learning, and demands for relevance. The pressure on European business schools is intense. They must deal with slow economic growth, ageing populations and lower public spending on education.

I have been in business education for nearly 30 years, and I cannot remember a time when my industry was so fluid, challenging and exciting. Business schools are great at telling companies how to deal with disruption, but now we are being disrupted ourselves. How schools respond to these challenges will shape their destiny for the next 20 years.

Four new types of competition

Established business schools are facing at least four new types of competition:

First, new schools from the BRICs (Brazil, Russia, India, and China) are moving fast. Some will not be held back by tenured faculty or internal hierarchies and departments. This will give them a huge competitive advantage.

Second, corporate universities are becoming more common and often cherry-pick faculty from top business schools. Every day, corporations from the US to Indonesia to the Middle East are starting their own learning centres.

Third, major consulting firms such as BCG, McKinsey and Accenture do not just want to make recommendations to their clients any more – they also want to help with implementation. So that means more competition.

Fourth, technology and the explosion of online learning are creating competition and putting downward pressure on fees. Every major school is experimenting with technology and nobody knows who will be the winners.

I can see the appeal of MOOCs (Massive Open Online Courses) – they are a great way to transmit knowledge to a lot of people anywhere. But MOOCs have limitations. They are not terribly good at teaching how to apply this knowledge, or how to develop the soft skills and instill the values of responsible leadership. Executives cannot become global leaders just by looking at a screen. There are also the well-known MOOC problems of course accreditation and high dropout rates.

I think the most successful business schools will offer a blend of face-to-face and online learning. Effective online courses probably will benefit from big established brands (such as Harvard or Wharton), but SPOCs (Small Private Online Courses), tailored specifically to a limited number of executives at a single company, are likely to become popular, since people like to think “I am different, my industry is unique”.

Meanwhile, business school customers want “the best deal”. Increasingly, this means shorter programmes at a competitive price that have a meaningful impact. Faced with these disruptive forces and increasingly similar programme portfolios, how can business schools maintain a sustainable competitive advantage? Relying on a strong brand alone will not be good enough either.

There is no magic formula for success in such an unpredictable industry. But one of the keys is for business schools to differentiate themselves by specializing in what they can do best. For IMD, that means focusing exclusively on first-class executive education.

Business schools’ customers face tough competition and disruption every day. Why should our industry be any different?

Please share your experiences and views in the comment section

PHOTO CREDIT: by Daniel Foster from flickr

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