In the world of elite business schools, Harvard and Stanford are
separated by ideology, distance, and a rivalry that has them competing
for students, faculty, and corporate customers. But in an
uncharacteristic twist, the two now appear close to a landmark deal to
merge part of their B-school operations, BusinessWeek has learned.
The proposed plan: to combine the executive education arms of Harvard
and Stanford into a separate entity that will design and deliver
face-to-face and online programs to companies around the globe.
The venture may even be run as a for-profit entity, which would allow it to
operate outside university rules and to offer more incentives for
faculty participation. But even if it remains attached to the
universities, the alliance will mean revenues of $100 million-plus and
the birth of a blockbuster in the management education world. "If
they're successful and combine it with their brands, then it's
unbeatable," says Nancy J. Lewis, IBM's director of management
"NATURAL ALLIANCE." Beyond the glitz factor, the marriage is a survival strategy for an increasingly competitive market in nondegree executive
training. For one thing, each school has something the other needs.
Harvard is legendary for its studies in general management and
leadership, while Stanford has made its reputation in innovation,
e-commerce, and entrepreneurship. "It's a natural alliance, because the
two schools are in different parts of the intellectual space," says
Richard Schmalensee, dean at Massachusetts Institute of Technology's
Sloan School of Management.
Harvard and Stanford could use the allure and prestige of the combined
brand to launch an executive MBA (EMBA) program, which neither currently
offers but both are exploring. That's important, given mounting
competition, such as the University of Pennsylvania's Wharton School,
which will open a facility in San Francisco this fall for exec education
and for its EMBA. And developing programs jointly will presumably keep
the costs down for both.
The proposed deal will also include Harvard Business School
Interactive -- the B-school's online course-development arm -- as well as the
participation of Stanford University's engineering school. "We were
really motivated by a sense of the possibilities that might open up for
us if we were able to join forces," says Kim B. Clark, dean of Harvard
FIRST OF MANY? The B-school world had already taken to partnerships -- but until now, the alliances have mostly been between U.S. and non-U.S. schools, like the deals between Columbia Business School and London Business School or Wharton and France's INSEAD. Combining the intellect -- and wallets -- of powerhouse rivals Harvard and Stanford is likely to be only the first in
a series of domestic alliances, says Laura D'Andrea Tyson, dean of the
University of California at Berkeley's Haas School of Business and a
BusinessWeek columnist. "This will only intensify this trend and force
our hands," she says.
Still, it's not exactly a merger of equals. In BusinessWeek's executive
education rankings, Harvard tops the list, while Stanford comes in at
No.5. And Harvard will bring to the table three times the course
material and research as well as faculty more committed to executive
education than Stanford's. But "Stanford has some significant
advantages" to offer Harvard, including a West Coast presence and New
Economy panache, says David Yoffie, chairman of the advanced management
program at Harvard.
The details -- where the new entity will be located and each school's
intellectual contribution and share of revenues -- will take several months
to work out. But "it's a worthwhile challenge," says Joel M. Podolny,
Stanford's senior associate dean for academic affairs. The first
assignment: figuring out what name goes on the shingle. By Jennifer Merritt, with Mica Schneider in New York