Teaching New Executives Some Old Tricks

B-schools offer Web entrepreneurs the knowledge they lack

Cross-fertilization between the New and Old Economies is the idea behind business-school marketing these days. B-schools have sunk big money over the past three years into researching e-commerce, entrepreneurship, and technology in order to bring bricks-and-mortar managers up to speed. Now they want to ply their expertise in reverse--training dot-com execs in traditional management theories, financial modeling, and other areas where they fall short. "We can teach a dot-com about logistics, alliances, access to sources of innovation, or globality," declares C.K. Prahalad, a University of Michigan professor of business administration. "Everyone has to learn new tricks, including dot-com companies. There's a lot [to understand] beyond the IPO."

To be sure, dot-com execs are self-starters with invigorating, challenging jobs. They are recognized and rewarded with lucrative compensation packages. But they frequently overlook the importance of strategic partnerships, underestimate the impact of logistics, or just forget to say "thank you" to top employees. Neal E. Thornberry, professor at Babson College's School of Executive Education in Wellesley, Mass., observes that Web entrepreneurs sometimes neglect to pass to underlings the secrets of their success. Whatever the case, New Economy managers need just as much guidance as executives from older businesses who are cramming to get a handle on e-commerce.

B-schools have certainly been busy getting into the e-commerce field. Last year Stanford University set up a $25 million Center for Electronic Business & Commerce, and the University of Michigan established a $10 million center for entrepreneurship. Northwestern University's Kellogg Graduate School of Management started a technology and e-commerce major for MBA students last fall, just as University of Pennsylvania's Wharton School introduced an MBA major in managing electronic commerce. To win over dot-com managers, a slew of schools are putting similar programs online or opening locations in Silicon Valley.

Trouble is, the dot-commers aren't yet showing up in droves. Lack of time is one reason. And it probably hasn't yet dawned on a lot of young entrepreneurs that there's anything they can learn from professors. But that could change as some who have taken courses spread the word.

Take Mark Evans, CEO of Pittsburgh-based Confluence Technologies, a 40-person business that creates software for mutual-fund companies. He had solid grounding in technology and e-commerce, but was looking for "some magical clues as to how to win in the Internet game."

Evans didn't get magic, but by the end of a $4,950, five-day course called Strategies for Electronic Commerce at Pittsburgh's Carnegie Mellon University, he knew where to start: by determining precisely where his company added value in the financial services market.

After taking the course, he rewrote a third of his company's business plan. Says Evans: "It allowed me to focus on where we were experts." He now says he'll send his product managers to the same course. "It's hard to find the time to think about the way you're developing a business," adds Scott Pitasky, Amazon.com's director of strategic growth. He still raves about a course he took at Cornell a few years ago. "At the executive courses, professors ask why your company does things one way, and they make you think."

No school intends to segregate dot-com and traditional executives; the aim is to bring them together. Many dot-commers, in fact, are just as eager as old-style managers to catch up on the latest big-picture theories about where e-commerce is heading. Some professors invite founders of young, fast-growing companies to lecture grad students; others focus case studies on New Economy companies.

Courses are becoming more specialized as the novelty of e-commerce wanes. At the University of Michigan, Theresa M. Welbourne, associate professor of organization behavior and human resources, is gearing up to launch a course on people management in high-growth companies. "When companies are small, dealing with people comes naturally," she says. "But as a company grows, that's easy to lose." Michigan will offer her course in late 2000. First, though, she intends to put the final touches on her course after getting feedback from executives at such e-commerce companies as Amazon.com, priceline.com, and Drugstore.com.

The Kellogg School is also zeroing in on Internet managers. Anthony J. Paoni, clinical professor of information technology at Kellogg, is one of the teachers of the sold-out Winning Strategies for e-Business course, which costs $3,800 for three days. "People think that dot-coms have it all right," says Paoni. But "dot-coms have to understand how to coexist with existing business models. They don't appreciate the challenges and opportunities of the Old Economy."

THE MOTHERLAND. By the end of 2000, Paoni says, Kellogg will take its act to the dot-com motherland and offer courses in Silicon Valley. Carnegie Mellon is crafting a new array of three-day courses and could ink a deal to offer them by year's end at the NASA Ames Research Center at Moffett Field, Calif., Harvard Business School, meanwhile, inaugurated a West Coast presence at the end of February, offering a course in San Jose, Calif., called Leading Product Development in Internet Time.

As e-commerce goes global, B-schools are also looking beyond the U.S. Martin Diano, associate director of executive education at the American Graduate School of International Management (Thunderbird) in Glendale, Ariz., is putting the final touches on Global Management in a Digital World, a course that's sold out for May. The school plans to offer another section later this year. New York University's Stern School, meanwhile, will present its latest course, Electronic Commerce: Reinventing Business, in Milan (in May) and New York (in October). For dot-com execs looking to move their companies forward, a little scholarly perspective may be just the boost they need.

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