It takes more than a fancy new name to create a new identity. Certainly, that was the case for Novartis (NVS), the pharmaceutical powerhouse created by the $21.8 billion merger of two Swiss giants, CIBA-Geigy and Sandoz, in 1996. The company's new moniker--derived from the Latin novae artes, meaning new skills--was to signal its commitment to research and development.
But that was only the first step. To create a unified corporate culture from this vast, blended family, Novartis packed off more than 500 of its senior executives to Harvard Business School for a five-day customized leadership training program, followed by more sessions in China, India, and Switzerland with the B-school's faculty. "By the end, I felt like I knew what Novartis was," recalls Cynthia Hogan, now a unit vice-president. And, she says, the new cadre of managers got a chance to "put our thumbprint on the company." Now the company, based in Basel, Switzerland, sends thousands of its executives to Harvard and other B-schools for customized programs that stress the home corporation's case studies.
Harvard Business School earns high grades as a favorite purveyor of executive education in BusinessWeek's 2001 ranking of the best nondegree mid-career programs. In fact, Harvard tops our biennial rankings for the third time in a row, with many companies citing the school's ability to impart both money-saving ideas and new business strategies. For decades, Harvard has drawn the best and brightest professors and delivered consistent quality of classes and instruction. This year, Harvard is offering 47 open-enrollment executive courses--up from 27 in 1996--for 4,051 execs, and the school's well-regarded Advanced Management Program attracts high-level execs from around the world. The school also has eight new programs abroad in places such as South Africa and China and a growing custom business with 21 corporate clients, vs. just 10 five years ago.
"AN INVESTMENT." Like Harvard, the other schools that stand out in the 2001 rankings are adept at creating both custom and open-enrollment programs. There's another new trend: Schools around the world made a strong showing, with INSEAD, based in France and Singapore, posting No. 2. This marks the first time a non-U.S. school has broken into BusinessWeek's top five. Respondents advanced INSEAD from No. 9 in 1999, lauding its numerous programs abroad and the up-to-date course offerings. What's more, the 2001 survey had the most input from non-U.S. companies ever. Of the 210 that completed surveys, 57% hailed from outside the U.S. Those responses helped carry some of Europe's best schools--such as London Business School, IMD in Switzerland, and Spain's IESE Business School in Barcelona--into the top 10.
In conjunction with Boston-based Cambria Consulting Inc., BusinessWeek asked leadership-development directors at a total of 514 companies which exec ed programs were the best overall and which were the best in such specialized areas as global business, marketing, and leadership. The corresponding rankings are on page 112, and detailed profiles of each organization are available online at www.businessweek.com/bschools.
BusinessWeek began ranking executive education programs back in 1991 as more and more corporations turned to business schools to sharpen the leadership and management skills of their executives. Once viewed as a cushy perk for the newly promoted, these programs have become an integral part of corporate strategy--and serious work for participating executives. "Our clients look at this as an investment and want to see a payback," says Ian Hardie, associate dean for executive education at London Business School.
Schools know that they can't get away with offering rehashed MBA classes or one-size-fits-all approaches, especially with tuitions that can reach as high as $49,000 per student. Corporations are demanding innovative programs such as No. 8 IMD's New Venture Booster course in which teams of executives do the legwork to launch new businesses for their own companies. "In a week's time, we can push a project forward by 8 to 10 times what could've been done at work," says James Ellert, associate dean for academic affairs at IMD.
This year, BusinessWeek evaluated more providers than ever--121, vs. the 63 in our last survey, conducted in 1999. In the past 12 months, 159,245 executives attended programs at those schools--a 56% increase since 1996. Industrywide, revenues from executive education more than doubled in the past academic year, to an estimated $800 million. The average school's take nearly doubled in that period, to more than $8 million.
Still, even as Harvard and other B-schools earn kudos for excellence, there are signs that loyalty is beginning to fray. Leadership-development directors at companies increasingly prefer to mix and match programs and professors to suit their executives' needs. "We don't want to be beholden to one university, so we have a good collection of partners," says Gert Stuerzebecher, vice-president of corporate management development at Bertelsmann, the German media giant. Bertelsmann runs programs with INSEAD and London Business School, targeting their top managers and middle-level employees.
Nor are companies relying solely on B-schools to get what they need. A growing number of corporations are designing their own internal training, creating in-house universities to tackle the issues that are most germane to their businesses and executives. While 56% of respondents say business schools are the most effective at delivering executive education, as many as 62% also work with consultants, and 28% work with other providers of executive education.
STRENGTH IN NUMBERS. In fact, the top-scoring program for leadership development--the Center for Creative Leadership in Greensboro, N.C.--isn't a university at all but a 31-year-old nonprofit organization for leadership development with programs in 22 countries. Its clients include major companies such as General Motors Corp. (GM) and Pfizer Inc. (PFE), and it draws some of its faculty from the world's top business schools. The Center for Creative Leadership, which ranked No. 13 overall, is the only non-B-school to make it into BusinessWeek's top 20 ranking.
Hoping to stay competitive, the B-schools have scrambled to increase new course offerings, customized programs, and surprisingly, partnerships with their rivals. Among the top five schools in this year's rankings, four have forged alliances with each other in the past six months. The Stanford Graduate School of Business, for example, the No. 4 provider of exec ed, has teamed up with Harvard to operate all of the schools' custom programs. And the No. 5 provider, University of Pennsylvania's Wharton School, has hooked up with INSEAD to create as many as four open programs, including one on international sales-force management.
Sometimes the corporations themselves play matchmaker. Next month, Coca-Cola Co. (KO) will bring in Wharton and Emory University's B-school to conduct some joint leadership training. Wharton will offer its financial and global acumen while Emory will supply expertise in marketing and general business. Later on, Columbia and other B-schools expect to play a role.
Indeed, the more that corporations clamor for relevancy, the more B-schools are offering them custom-tailored approaches, in alliances or from among their own rosters. "Fifteen years ago, you would have used off-the-shelf case studies on companies," says Jay Conger, a London Business School and University of Southern California B-school professor. "Now, 60% to 70% of what I do is highly customized." BusinessWeek's top 20 schools earned an estimated 43% of revenues through custom work, with programs costing anywhere from $6,000 at No. 16 Thunderbird to nearly $6 million at Duke, which ranks twelfth, for a program serving 3,000 execs.
That welcome source of revenue may not be quite so bountiful in the months ahead if the economy continues its downward slide. Unlike executive MBA programs, which are reporting little decline in enrollment so far, executive nondegree programs tend to get the ax sooner because they're tied in to companies' training budgets. In tough times, executive sessions can suffer 5% to 20% drops in enrollment as companies cut back on travel and training, according to administrators. Already, some are reporting slowing business as purse strings tighten. At the University of Michigan B-school, for example, revenues have fallen 15% this year, says F. Brian Talbot, associate dean for executive education.
Making matters worse, since the September 11 terrorist attacks in New York and Washington, schools have faced new cancellations and postponements. Michigan has shelved six programs for now. And the future of Harvard's program in Egypt, drawing executives from across the Middle East and Africa, is anybody's guess, admits Richard H.K. Vietor, senior associate dean and chairman of executive education at Harvard.
Still, the business of training executives goes on. Wharton is designing a five-day program for 60 execs this December called Competing in a Completely Changed World. And the Center for Creative Leadership plans a new lecture on how leaders can deal with cultural differences and respond to international crises in light of the attacks. As they respond to their own changing business environment, B-schools are actually practicing the management lessons they preach. By Mica Schneider, with Brian Hindo, in New York