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The ‘barbarians at the business school gates’

You will not find any books, exams or lectures at THNK School of Creative Leadership, in Amsterdam — one of many alternative providers of executive education that are taking on business schools at their own game. In a break with traditional approaches, its courses are experiential, engaging participants in hands-on experiences — such as role-playing business scenarios — and reflection that take them out of their comfort zones.

“Our faculty are not the ‘sage on the stage’, but the ‘guide on the side’,” says Mark Vernooij, a partner at THNK. This method is not only fun, he suggests, it also helps facilitate long-lasting changes in mindset and behaviour.

THNK claims its “creative leadership” model can help meet the needs of wider society, while its training courses are aligned with the UN’s Sustainable Development Goals. “We believe leadership development can be a huge lever in making positive change in the world,” Vernooij says.

Business schools are facing fierce competition from such new players in executive education, an important source of income. The global market for corporate training was valued at more than $345bn in 2021, and it is projected to reach $493bn by 2028, according to consulting firm SkyQuest’s Corporate Training Market Survey.

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“The market is heating up and the overall market is growing significantly, but so are the competition and the new players,” says Tristan Hockley, the education sector leader at PwC’s consulting business in south-east Asia.

Beyond academic institutions, consulting firms such as McKinsey & Company and Egon Zehnder are pushing into executive education. There are also online platforms such as edX, Coursera and Udacity offering business courses for the enterprise market, as well as “corporate universities” including one at Google and the Disney Institute. Another threat to business schools comes from the boom in executive coaching. “One of my fears is the sustainability of all these models,” says Hockley. “There will be winners and losers.”

Competition is driven by the strong appetite for executive education, even as companies face financial pressures. High inflation and interest rates would usually put learning and development budgets at risk, but the picture is nuanced at a time of low unemployment and high staff turnover.

“My budget isn’t shrinking — it’s expanding,” says Rory Simpson, the chief executive learning officer at Telefónica, the Spanish telecoms operator. “I really think there’s a revolution in learning. If you ask employees what they want from HR, after payroll the next biggest thing is education.”

He highlights a battle for his spending: “Consultants are trying to batter down my door. We work with business schools but, if they’d done their job correctly, corporate universities wouldn’t exist because companies would have what they needed.”

The issue is that business schools focus on qualifications rather than the skills companies need, he argues. “They’ve got to realise that what we do is far more than courses. What we’re trying to do is give people hope for their future.”

As companies look beyond academia, upstarts are bringing unique strengths to executive education. Since launching in 2014, the McKinsey Academy has trained nearly 1mn individuals in areas such as digital transformation, operations, sales and sustainability. The firm says a closeness to its clients means it can tailor programmes to their needs.

Additionally, a focus on applying theory in practice, through simulations and coaching, is crucial to its offering. “We don’t want to get stuck in theory land,” says Ben Hall, the global leader of McKinsey Academy. That shortcoming partly explains why, although two-thirds of business leaders polled by McKinsey in 2020 said their organisations placed a high value on learning, only a third said it achieved their objectives or impacted their business.

New entrants are deploying technology to remedy the deficiencies, including the limited reach of on-campus programmes. Hadi Moussa, managing director for Europe, the Middle East and Africa at Coursera, says that online learning has democratised executive education; technology has made it possible to upskill an entire organisation, rather than just the most senior managers. “We build capabilities at scale, and at a lower cost,” he says.

Further, he believes online providers can be preferred by corporate clients, many of whom were convinced to take up online learning during the pandemic. Coursera for Business has signed up more than 3,500 companies since launching in 2016. “Companies are looking to optimise their spend in this economic environment,” Moussa says. “A few years ago, learning was looked at as more of a cost centre, but it’s now seen as a critical need.”

The market is becoming tougher for business schools, but they do have assets in their neutrality, strong pedagogy and academic research. “The business world seems to dislike theory, but it matters a lot,” says Melanie Weaver Barnett, executive director of Unicon, a business-school consortium for executive education. “We are teaching concepts that have been tested and validated based on evidence — it’s not hot air.”

Strong brands and a breadth of expertise also count in schools’ favour. Many are now responding to the greater rivalry by offering more online programmes, customising content and forming partnerships to combine expertise.

“The barbarians are at the gate,” says Anne-Valérie Corboz, associate dean of executive education at HEC Paris. “But what’s interesting with these players is that we are competitive but also complementary.” The French school is working with several academic organisations to deliver an ESG training programme to consultants at Bain & Company.

Andrew Crisp, a UK-based education consultant, thinks structural changes are needed if business schools are to protect their turf. He says academic bureaucracy makes them less responsive to industry changes and some may look at hiving off their executive education units into a new entity. “Growing market share means having a business model that isn’t 20 years out of date.” 

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