While the players are fakes, the coach, in fact, is real: head manager for Duke University's men's basketball team, Mike Jarvis II. He has the team try the play again. And again. And again. Finally, it clicks. The pass finds its intended receiver, teammates complete a perfect pas de deux, and a jump shot from 12 feet out hits nothing but net -- no clumsy maneuvers, no fouls, no face plants. "For that moment, you were Duke basketball," Jarvis exults. These businesspeople will never realize any hoop dreams, but in the span of a few hours they have gone from a ragtag bunch of wannabes to a real team. In doing so, they managed to learn what it takes to set and achieve goals -- in basketball or business -- in a way that could never be conveyed by a lecture or a PowerPoint presentation.
This kind of class outing is a hallmark of Duke CE, a for-profit carve-out of the Duke University Executive Education practice. It's also a big part of the reason Duke has landed at the top of BusinessWeek's 2005 rankings of Custom Executive Education providers for the second time. With abundant financial and human resources to lavish on its programs, Duke CE has succeeded in molding its game into one that's tough for most competitors to match.
But Duke's success hasn't happened in a vacuum. In fact, for the first time since the dot-com bust, executive education is experiencing something of a boom, with both custom and open-enrollment programs registering double-digit growth. At the same time, the healthier climate has sparked more competition, and the industry is starting to see the beginnings of a shakeout. Even top-ranked programs like Duke's are starting to feel the pressure. "Anyone who thinks they are ahead had better not believe it," says Blair Sheppard, president and CEO of Duke CE. "Or you're going to fall out of the race."
The winners this year were the programs skilled at transforming midlevel managers into instruments of change. Indeed, exec-ed programs now occupy a strategic role they never had before, says Stephen LaCivita, associate dean of executive education at the University of Chicago and former chair of the International University Consortium of Executive Education. "More top execs are driving systemwide change in their companies by using exec ed," says LaCivita. "That is exactly why the custom programs have been rising like they have."
This year marks the second time BusinessWeek ranks customized and open-enrollment programs separately, as the purpose of each grows more distinct. Open-enrollment programs, which typically last a few days, are one-size-fits-all classes suitable for a variety of companies, in such subjects as strategy, marketing, or financial management. Custom programs give clients tailored assistance in solving specific, pressing problems -- anything from succession planning to global expansion.
To come up with the rankings, BusinessWeek surveyed managers and human resources directors from 163 companies in 22 countries about open and customized executive education programs. All told, the companies sent more than 21,000 employees to courses and spent hundreds of millions of dollars at B-schools and non-university-affiliated organizations. Of the 24 programs mentioned in the rankings, 10 are based outside of the U.S., up from five in 2003, a trend that reflects companies' desire for a better understanding of global markets.
In the relatively stable world of the MBA rankings, such volatility is virtually unknown. But executive education is constantly in motion, with new programs popping up and others gaining strength. Case in point: Seven new players entered the rankings this year for the first time -- among them Queen's University in Kingston, Ont., the No. 10-ranked open program, and Penn State, No. 8 among custom programs. These displaced familiar names like New York University and the Center for Creative Leadership in Greensboro, N.C., which dropped from the rankings even though it got top marks in leadership training.COUNTING THE COST
Much of the movement this year can be attributed to a new cost-consciousness. While many larger companies have increased training budgets, managers at some small-to-midsize businesses have questioned the return on programs that can easily cost upwards of $10,000 per person and have directed their spending accordingly. For them, the best return came from programs taught by someone with business experience, rather than academics who may be years removed from the corporate world. One of the programs doing a good job of combining business and academia is Stanford University, ranked No. 4 for open enrollment and No. 9 in custom programs. In its 10-day Strategy Marketing Management offering, for instance, participants are taught by a group of top Stanford marketing faculty with industry experts and executives from companies such as Intel Corp. ().
Failure to deliver that kind of firsthand experience has consequences. Some programs -- including Case Western Reserve University -- fell off the list this year for just that reason. "It's time for schools to get out of the 'school' mentality and into the 'business' mentality," says Dennis Baltzey, head of leadership development for Royal Dutch/Shell Group (), which sends students to IMD International, Duke CE, and INSEAD. "Schools that are doing it right work to understand your business. They have taken a page from the consulting field."
Harvard has written that book. The No. 1 open-enrollment provider plays to its strengths, using its case study method in both open classes and custom programs like those developed for outfits as diverse as the NAACP and the NFL. That strategy provides companies with the kind of instruction they want -- steeped in real-world experience -- and supplies Harvard with new clients that serve as grist for its case-writing mill. "Executives coming here want to hear from a faculty that has a lot of contact with practice," says Srikant M. Datar, senior associate dean and head of executive programs. "Because of our focus on field-based research, we can provide this."
Behind Harvard in open enrollment is INSEAD, in Fontainebleau, France. Since the program's inception in 1968, INSEAD's focus has been global, and the school has benefited strongly from globalization. In 1998, when other programs were forming joint ventures with Asian B-schools, INSEAD chose to go it alone and open a satellite campus in Singapore. Today, 30% of INSEAD'S exec-ed programming takes place there, supported by 40 full-time faculty. More than 50% of those clients come from outside of Asia, with more and more from the U.S. They're looking for a broader focus that many U.S. B-schools lack, says Soumitra Dutta, dean of executive education. Companies recognized this as a strength at INSEAD, giving it high marks not only in global business but also in innovation.
For institutions like INSEAD, 2005 was an exciting year. Growing complexity in business made the hands-on training at such programs more critical for companies and more lucrative for providers. But the providers also learned an important lesson: If they want to remain on top, they need to supply training rooted in real-world practice. Esoteric theory may have a place in B-schools, but the executive-education classroom isn't it. By Geoff Gloeckler