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 development worldwide.
"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 Business School.
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.
Corrections and Clarifications
"When Harvard met Stanford" (News: Analysis & Commentary, Apr. 30), reporting that Harvard Business School and Stanford Graduate School of Business have proposed to merge their entire executive education departments, requires clarification. Harvard Business School says it does not intend to include open-enrollment programs in the joint venture at this time, but it says the two schools will create a new organization to deliver joint programs customized for companies, including online offerings. Such an organization would not be a for-profit entity because it would violate Harvard guidelines, says HBS. The story said that "Harvard and Stanford could use the allure and prestige of the combined brand to launch an executive MBA program, which neither currently offers but both are exploring." HBS says it has no plans to offer an executive MBA at this time, but says both schools have explored the idea.
By Jennifer Merritt, with Mica Schneider in New York