Back To School

At Northwestern University's Allen Center, a chef in whites and atoque whips up omelets to order. The executive dining room at the University of Michigan dishes out double-chocolate cheesecake with steaming cappuccino and espresso. At Wharton School, waitresses wheel carts of midday treats -- freshly baked cookies in silver trays on white linen--down the hallways outside modern classrooms.

Welcome to the world of executive education. For the tens of thousands of managers who yearn to join the next generation of CEOs and presidents, it's part country club, sure. But it's also part boot camp: study groups that meet into the early morning, classes that start at 8 a.m. sharp, and the throat-constricting challenge of making a presentation before a room of unfamiliar faces.

It's also expensive. Of the $12 billion spent annually on all executive development, slightly more than 25% goes to the business schools. The recession has slowed business somewhat, but executive education has still become the newest B-school boom. Duke University's J. B. Fuqua School of Business has seen its exec-ed revenues jump by 333%, to nearly $8 million, since 1986. Wharton has already tripled its exec-ed revenues, to $16 million this year, from only $ 5.7 million five years ago. Even schools with merely regional reputations have managed to climb aboard the exec-ed express. This year, the University of Tennessee's B-school will book more than $6 million in revenues, up from only $ 703,000 in 1981.

With all the money they're spending, however, more and more corporations are asking tougher questions about what they get in return. Companies expect that their student-executives will be steeped in leading-edge thinking they can later use to solve the real-life problems confronting U. S. business. What they're often getting instead is classes that offer mere overviews of disciplines such as marketing, taught by narrowly trained academicians.

Disenchanted, companies are trying new approaches. Many are forging partnerships to design customized programs in conjunction with schools eager to meet their needs. And some have even opted to abandon the groves of academe, and are instead bringing more executive development in-house.

CRIMSON EROSION. When they do spend big bucks to send managers back to school, companies want to know where they'll get the greatest return. BUSINESS WEEK's

first-ever survey of executive-education programs points to the University of Michigan's School of Business in Ann Arbor. Michigan captured the No. 1 spot in BW's rankings by emerging as the favorite of corporations and by garnering the third-best grades from executives who have attended its programs. There were other surprises, too. Many of the traditional elite B-schools, such as Harvard, Wharton, Columbia, and MIT, failed to make the top five. Instead, Virginia (2), Northwestern (3), Duke (4), and Stanford (5) rose into the top tier (table, page 104).

Indeed, the fastest-growing schools aren't the traditional citadels of executive education, but a more aggressive and nimble group. For years, Harvard business school stood virtually alone in its commitment to exec ed. Only five years ago, more than 13% of all the managers attending programs at BUSINESS WEEK's Top 20 schools went to Harvard. As other B-schools have come to believe that a presence in exec ed is key to their reputations, Harvard's market share has plummeted to just 5%.

Like BW's previous rankings of MBA programs, this study determined the best schools in executive education by surveying both participants and corporations. In effect, the survey measures how well the schools are serving two key markets: student-executives and the companies that foot the bill. The participant poll was mailed to 3,546 managers uho attended the flagship programs of 26 top schools. A total of 1,567 responded. The poll of corporations was sent to officers in charge of management development. Some 144 companies out of 346 replied. Both results were then combined to create an overall ranking of the best of the roughly 150 schools offering exec-ed programs.

In addition to this survey of nondegree programs, BUSINESS WEEK also conducted a separate study of schools offering longer, weekend programs that lead to an MBA. Typically, companies pay the freight for these two-year MBA programs for experienced executives. Northwestern's Kellogg school was awarded top honors in that survey.

'BIG-IMPACT IDEAS.' In this survey of the briefer exec-ed programs, though, Michigan won first prize, thanks to its emphasis on providing new ideas to busy executives in many of its 47 programs. "These people work their tails off, and they want results," says F. Brian Talbot, a professor who directs Michigan's two-week manufacturing course. "They hope to take away one or two big-impact ideas. And that's what we deliver."

In the school's four-week general management program, the core faculty uses its experience in real-world consulting to make academic theory more relevant. C. K. Prahalad, Michigan's guru on global competition, has consulted with such companies as AT&T, Eastman Kodak, and Philips. "In class, I try to personalize lessons from my consulting experiences," says Prahalad. "The long-term scorecard for me is not how well we are rated in the classroom, but whether we're having an impact on changing the way companies compete."

Of all the flagship programs, however, Virginia's general management experience got the best reviews from participants. The program is staffed by an eight-member faculty team whose only assignment is to work with the executives, from the initial weekend of outdoor team-building exercises to graduation six weeks later. "The faculty commitment is to exercise with them, have dinner with them, and to sit in on classes they don't teach," says John W. Rosenblum, Darden School dean.

Most alums offered upbeat appraisals gf exec-ed programs in general. Asked to rate the return on time and money invested from zero to 100%, their responses averaged 81%. But there was no shortage of complaints -- many of them reminiscent of those voiced by MBA students in BW's earlier surveys. Some managers were surprised by the inconsistent teaching quality at the world's most prestigious universities. They griped about having to debate dated case studies from the 1970s, which they deemed of little relevance in today's world. Some complained that cases they studied nearly 20 years earlier as MBA students were still being taught.

OUTRAGE. Women and minorities were often shocked to find themselves in classrooms that looked like the virtually all-male, all-white MBA classes of the 1950s--with the exception of more foreign participants. At Stanford, for example, only 3% of about 180 executives in its recent eight-week program were female. "We've been beating our heads, trying to get more women in programs," says James E. Howell, director of executive education at Stanford. "We are neither the cause nor the cure."

If students had some complaints, the companies that foot the bill often seem downright angry at what they're getting in return. Corporate officers charged with nurturing and developing executive talent are among the toughest critics of the B-schools. "They're just too bureaucratic and too slow," believes James Baughman, who runs General Electric Co.'s highly regarded Management Development Institute. "The programs are too long. They're not flexible enough. They're too expensive, and they lack action learning," in which executives in teams work on real-world problems to come up with real-world solutions.

Such outrage over expense is a common refrain among corporate customers, who complain that B-school programs often vary little from year to year and have little relevance on the job. "We're talking about tens of thousands of dollars for a few days of experience," says an official from a major user of B-school programs. "I feel a righteous indignation to expect high quality."

Most management-development executives are so indignant that they have grown skeptical of B-schools' motives for offering exec ed. Some 63% believe the schools are aggressively pursuing executive education simply to increase their revenues, rather than viewing it as key to their educational mission. Slightly more than half think the courses are too theoretical. "Unless the schools become more astute, they'll miss a major opportunity to help American business," says Ronald P. Carter, director of executive development at Merck & Co. "It's a shame, not to mention that many of us are sending them large checks, so we're reinforcing the process."

American businesses have been writing those checks in earnest since the 1950s, when companies felt a sudden need to turn functional specialists into general managers. For decades, most advanced management programs offered up little more than a "greatest-hits" selection of lectures and debates from the full-time MBA programs, and a multiweek sojourn in a top program was as much a reward as it was an exercise in real development. "Executive education used to be viewed as a cookie for good performance," says Douglas A. Ready, director of the International Consortium for Executive Development Research in Lexington, Mass. "Now, companies demand more relevance. They're saying: 'If I'm going to send $200,000 of corporate property away for several weeks, I want to see a payback.' "

Fair enough. But it's hard to measure the intangible rewards of most general management programs. Managers go off for up to 11 weeks, as in the case of Harvard's Advanced Management Program, and meet dozens of executives from different companies all over the world. While it's clearly a broadening experience, there's seldom an immediate, quantifiable payoff for a corporation.

The schools lay some of the blame on the companies themselves. "When managers get back to their jobs, they face a desk piled with mail and demands from their bosses, and they have no time to exercise anything they've learned," says Margaret Fisher, who heads the Office of Executive Programs at Boston University. "Many times, their bosses don't even know why they've gone."

Deans urge managers to sit down with their supervisors to discuss objectives before going off on programs. When Pennsylvania State University surveyed its student-executives, fewer than three out of 10 said they had been properly briefed before being sent to its programs--although the companies said that more than 80% had been. "A lot of participants arrive not quite knowing what's going on," says Albert A. Viscere, Penn State's assistant dean for executive education. "They think: 'It's gotta be good because I'm going away for a while and it costs some money,' but they don't know what they're supposed to get out of it."

For their part, companies gripe that most programs rarely lead directly to results on the job. That's why several major corporations, such as GE and Motorola Inc., have extensive classrooms of their own. Some 6,000 managers attend GE's Crotonville training center in Ossining, N. Y., each year, while an additional 6,000 are put through company-sponsored programs around the world. "If you send someone off to a B-school, the environmental segment of a program might focus on global warming only because that faculty member is interested in it," says GE's Baughman. "But we can get into how we should evaluate and remediate real environmental issues. We bring it down to application, not just environmental appreciation."

CUSTOM WORK. In search of greater relevance, a growing number of companies are also collaborating with the business schools to create custom programs--which are growing at a 25% clip a year. Harvard, Stanford, and MIT have declined to customize their offerings, citing the drain on resources and the possible blurring of the line between education and consulting. But half of Wharton's $16 million business in executive education now comes from such work. "Custom courses are very demanding," says Thomas P. Gerrity, dean of Wharton. "I can understand why some schools stay away from them. But they're a very important dialogue with companies."

Consider the relationship between Duke and Johnson & Johnson. Wanting to avoid the fate of other U. S. companies hurt by foreign rivals, J&J in 1988 took the first steps toward a corporate goal of becoming a "world-class competitor." Senior management wanted all executives to be more aware of customer needs and of how J&J's operations stacked up against the competition's. For six months, a Duke professor interviewed presidents, vice-presidents, and plant managers at 11 J&J companies. The views of hourly workers were solicited in focus groups, and J&J's top 200 executives identified key issues via written surveys. The results were used to create an intensive one-week curriculum on world-class manufacturing at a cost of $2,700 per student-executive.

Beginning in mid-1989, groups of 40 or more J&J managers from specific operating companies began arriving at Duke's newly opened $15 million R. David Thomas Center in Durham, N. C. After hearing the latest thinking on just-in-time techniques and benchmarking, they broke into teams to develop "action plans" for presentation. By week's end, each team left with a plan to implement back on the job. One unit reported reducing inventory levels by 43%. Another J&J unit cut production cycles in half.

Besides real-world practicality, such programs offer privacy to debate proprietary issues. "One of the good things about a custom program is that you can take your gloves off and you can bare your soul," says Allen C. Anderson, a J&J vice-president. "You know that what you say will stay in the room."

The program's success led to seven other initiatives with Duke, including three more one-week programs on such things as "total employee involvement" and "world-class supplier partnerships," plus three other seminars and workshops. In the two years since the first group descended on Duke, some 665 senior and mid-level J&J executives have attended the programs. A further 250 are expected to participate by mid-1992.

Collaboration with academia, however, doesn't always come easy. When Ford Motor Co. began a leadership program for middle managers with Michigan's business school in 1988, there was skepticism on both sides. Ford had tried to launch courses in the past, but they never came off. Robert E. Quinn, a Michigan professor who was putting together the program, recalls one faculty member who warned him that Ford would "suck all the ideas out and leave."

To forge the partnership, 12 Ford executives and 8 Michigan professors met in Plymouth, Mich., over the summer of 1988. "That's when the fun started," says Neil B. Sendelbach, Ford's manager for the program. "Some executives saw it as: 'Now we have to go out and educate these university types.' "

SHOCKER. After thrashing out the differences, they came up with a novel nine-day curriculum--half taught by Ford executives themselves. The idea: to get middle managers to be more active, not just carry out orders. Cross-functional teams were formed to explore such key issues as leadership, quality, and customer satisfaction. To shock managers out of complacency, they are shown Ford's equivalent of a horror movie: "The Honda Tapes," featuring enthusiastic Honda customers praising their cars. On the sixth day, managers focus on how to apply the week's lessons.

Six months later, they return for a three-day follow-up, during which managers explore the program's impact on their jobs. Inspired by the program, one manager at Ford Credit, for example, reduced the time for loan approvals from two days to half a day--an achievement she announced at an early follow-up session. So far, nearly 40 classes totaling some 2,000 managers have been sent through the exercise.

Yet until 7 1/2 years ago, Michigan's B-school refused to offer custom programs for corporations. Such ventures were deemed too commercial and too pragmatic. No more. "Executive education has become a source of innovation and a wonderful means of faculty development," says B. Joseph White, Michigan's new dean. As more schools and corporations seek partnerships, executive education can only become more meaningful. And as BW's survey suggests, there's plenty of room for improvement.