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Volume 03 | Issue 03 2009

EFMD Global Focus

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Volume 03 | Issue 03 2009

Phone: +32 2 629 08 10 Fax: +32 2 629 08 11

Email: info@efmd.org

How do you find the world’s best students?

Into the mainstream Koç Business School’s Baris Tan is bringing management education in Turkey into the European mainstream

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INSIDE THIS ISSUE

© ���� Graduate Management Admission Council®. All rights reserved. GMAT is a registered trademark of the Graduate Management Admission Council in the United States and other countries.

Schools for scandal Gerard van Schaik says business schools could save business from itself

History boys It’s not bunk and it has plenty of lessons for management says Morgen Witzel

Global leaders Andrew Rutsch on how business can find and develop the leaders it needs

Degree of doubt Degree and nondegree management education don’t mix says Ulrich Hommel

Creative tension Patrick Harris explains how to be creative in the workplace

Cheap and cheerful Martín Vivancos on why low-cost businesses work so well

International Teachers Program Hosted by the Kellogg School of Management Program begins January 2010 The International Teachers Program is an intensive faculty-development program dedicated to helping business educators develop suitable skills and capabilities to be successful in their careers. The program benefits from the participation of a diverse group of top-notch teachers and professionals from around the world who not only have a passion for teaching business topics but also a passion for teaching how to teach. The program begins in January 2010 with the residential module scheduled for July 4–11, 2010 at Northwestern University’s Kellogg School of Management in Evanston, Illinois. For more information and to apply online please visit

www.kellogg.northwestern.edu/ITP or call 1-847-467-7000.

EFMD Global Focus | Volume 03 | Issue 03 2009

In focus...

Volume 03 | Issue 03 2009

In focus This issue of Global Focus marks the end of the third full year of publication of the magazine. It is no exaggeration to say that that short time span has seen one of the most cataclysmic series of events suffered by business and business and management education in most of our lifetimes.

We may be seeing (or hope we are seeing?) the first faint signs of recovery. Nevertheless, the overall emotion is one of stoic realism rather than exuberant optimism.

On page 14 Gerard van Schaik, Honorary President of EFMD, puts the case for realism at the level of the business schools. They did not, he says, cause the crisis; that was the fault of some pretty basic human failings, notably greed and hubris, within some parts of business itself. But they may well be able to solve it.

However, he argues, this can only be done if business schools accept the new reality that managers must be responsible to the society in which they live and to all the stakeholders they serve, not just a small minority.

One business school that is certainly following that line is Koç Business School in Istanbul, the first Turkish school to win EQUIS accreditation (page 8).

“To understand any crisis you don’t just need a management approach”, says Koc Dean Baris Tan. “You also need to approach it from the perspectives of international relations, political science, economics and so on.”

While Ulrich Hommel (page 28) rightly cautions that business schools must be careful about maintaining academic standards in their relationships with business, the crisis has without doubt increased co-operation between the two, particularly in the area of global leadership development.

Andrew Rutsch (page 24) and Jennifer Martineau and colleagues from the Center for Creative Leadership (page44) examine what companies are doing to produce the leaders they need.

And Christopher Jahns and others (page 48) and Allyson Stewart-Allen and Michael Christ (page 52) look at how corporations and management education providers are co-operating further to respond to the demands of economic turbulence.

Innovation is one key response. On page 32 Patrick Harris offers some suggestions on how to increase creativity at work while Martin Vivancos (page40) outlines the key business factors behind the continuing success of innovative low-cost business models and Franklyn Salimbene (page 36) puts the case for involving business students in community service.

Finally, Morgen Witzel (page 20) reminds us that while we might think the current situation is “unprecedented” there is little new under the business and management sun.

He points out that the first textbook on management, The Duties of the Vizier, was written in ancient Egypt more than 3,500 years ago.

Which leaves Global Focus with some way to go yet.

www.efmd.org/globalfocus

Volume 03 | Issue 03 2009

Contents Global Focus The EFMD Business Magazine

1 In focus

Executive Editor

4 Talking Shop

Matthew Wood matthew.wood@efmd.org Advisory Board

Eric Cornuel Jim Herbolich Howard Thomas Consultant Editor

George Bickerstaffe bickerstaffe@btinternet.com Contributing Editors

Michael Christ, Patrick Harris, Ulrich Hommel, Emily Hoole, Christopher Jahns, Jennifer Martineau, Tracy Patterson, Andrew Rutsch, Franklyn Salimbene, Gerard van Schaik, Allyson Stewart-Allen, Rolf Tilmes, Martín Vivancos, Ulrich Winkler, Morgen Witzel

EFMD research link launched 2009/2010 International Deans’ Programme (IDP) Masterstudies free trial extended Joint EFMD-EURAM Programme

8 Towards Europe How Koç Business School’s Baris Tan is bringing management education in Turkey into the European mainstream. By George Bickerstaffe

14 Can business schools rescue business?

Did business schools cause the economic crisis? No, says Gerard van Schaik, but they have a key role in determining what comes next

Design & Art Direction

20 Why management history matters

Jebens Design www.jebensdesign.co.uk

The economic crisis has prompted many to call for a greater emphasis on studying the history of business and management. Morgen Witzel looks at the lessons that could be learned and why they are so important

Photographs & Illustrations

Jebens Design Ltd / EFMD unless otherwise stated ©

Editorial & Advertising

Matthew Wood matthew.wood@efmd.org Telephone: +32 2 629 0810 EFMD aisbl Rue Gachard 88 – Box 3 1050 Brussels, Belgium www.efmd.org/globalfocus ©

EFMD

24 Identifying and developing leaders for a global context The most recent EFMD Sharing Best Practice CLIP Workshop focused on the identification and development of global leaders. Andrew Rutsch presents common challenges and key success factors identified during the workshop

28 Blurring the edges Mixing degree and non-degree management education is often a sign of profit seeking rather than innovative teaching argues Ulrich Hommel

32 Creative thinking We all want and need creativity in our personal lives and at work. But how can we nurture, encourage and use creativity successfully? Patrick Harris offers some suggestions

36 Are we responsible?

Is the crisis all the fault of business schools? Lots of people are saying so. But Franklyn Salimbene argues that they had already started to act and that involving students in community service via “service-learning” has begun to have an effect

EFMD Global Focus | Volume 03 | Issue 03 2009

Contents

20

40 Low cost, high return MartĂ­n Vivancos outlines the key business factors behind the success of Low Cost businesses such as easyJet, Ikea, Ryanair and Wal-Mart

44 Leadership development: is it worth the money?

Jennifer Martineau, Emily Hoole and Tracy Patterson of the Center for Creative Leadership explain how to evaluate the worth of leadership development

48 Supply and demand: trends and challenges in corporate learning programmes

36

The global economic crisis has created new challenges for management development and business education but also new opportunities, Christopher Jahns, Rolf Tilmes and Ulrich Winkler look at how suppliers are responding

52 Partnership at its best Allyson Stewart-Allen and Dr Michael Christ explain how a successful partnership between Lufthansa School of Business and London Business School delivered the General Management Programme

48 Value for money? Jennifer Martineau, Emily Hoole and Tracy Patterson of the Center for Creative Leadership explain how to evaluate the worth of leadership development page 44

www.efmd.org/globalfocus

News and events in brief from the business world

Talking shop EFMD research link launched

2009/2010 International Call for Papers – Journal Deans’ Programme (IDP) of Global Responsibility

EFMD has partnered with the world’s leading publisher of management research to launch Emerald Management First Research Link.

There are still some places available for the 20092010 International Deans’ Programme (IDP) co-organised with ABS (Association of Business Schools).

Research Link is an award-winning online resource designed to help circumvent the unnecessary and sharpen your focus on what really matters in management.

The IDP Programme enables a group of up to 20 international deans (recently appointed directors/ deans of the whole business school) to gain an international overview of strategy, marketing, The website delivers the latest ideas from the benchmarking, and the challenges and world’s top companies and business schools via opportunities facing management education articles, case studies and thought-leadership insight. and particularly the role of being a dean.

Emerald and EFMD have teamed up to provide The programme consists of three compulsory EFMD Research Link for EFMD members: a modules: quality management learning and development resource featuring articles, interviews and case Module I: 7-8 December 2009 at Judge Business School and Cranfield School of Management, studies.

UK, on themes related to research, faculty The objective of Research Link is to better issues, executive education and citizenship. connect the world of research with the world Module II: 12, 13, 14 April 2010 at Cheung Kong of business. There is so much intellectual capital Graduate School of Business, Tsinghua University coming from research that goes unnoticed and School of Economics and Management unused. With its dual membership structure and CEIBS, China, on themes such as (companies and business schools) EFMD internationalisation, student experience, is determined to address this opportunity. entrepreneurship, leadership and sustainability.

The website takes topical management articles Module III: 13, 14 June 2010 at ISM University from Emerald’s prestigious portfolio of business of Management and Economics, Vilnius, Lithuania journals and transforms them into concise, on themes related to undergraduate education, readable versions targeted at busy executives entrepreneurship, creativity, marketing and wanting to get up to speed on the hot topics branding. in business without reading hundreds of pages “The programme gave me unique access and of research from multiple sources. understanding about the operations and Research Link presents 11 management subject individual characters of top schools in the world areas to choose from. Two of these areas cover in a very short space of time. IDP also gave an talent management and work-based learning, understanding of what other international deans areas identified by EFMD as particularly were thinking about and a network of friendly relevant today. In addition to presenting quality deans as well as EFMD and ABS colleagues to content, an interactive discussion forum has talk to when I need some help.” been created to encourage open discussion Professor Baback Yazdani, Dean, Nottingham Business School on business/management issues.

For further details visit http://members.efmd.org

More information is available from Virginie Heredia Rosa: virginie.heredia-rosa@efmd.org

We are currently seeking papers for a new journal to be launched in 2010 that will be closely aligned with the goals and objectives of the Globally Responsible Leadership Initiative (GRLI) and EFMD.

Articles would be welcome from traditional management disciplines – accounting and finance, operations, human resources, organisational studies, marketing and strategy – where the articles build on our model for sustainable development.

It is also recognised that the development of global responsibility may also be directly informed by more fundamental disciplines such as sociology, politics, psychology, history or philosophy.

As a guide, articles should be around 5,0007,000 words in length. A title of no more than eight words should be provided. Each paper is reviewed by the Editor and, if judged suitable for this publication, is then sent to two referees for double blind peer review. Based on their recommendations, the Editor then decides whether the paper should be accepted as it is, revised or rejected.

To submit an article or to request more information, please contact the Editor: Grant.Jones@mgsm.edu.au More information can be found at: www.emeraldinsight.com/jgr.htm

EFMD Global Focus | Volume 03 | Issue 03 2009

Talking shop

The IDP programme gave me unique access and understanding about the operations and individual characters of top schools in the world Professor Baback Yazdani, Dean, Nottingham Business School

First Global Peter Drucker Centennial Forum

Masterstudies free trial extended

EFMD has entered into a partnership with the Peter Drucker Society of Austria to support the Peter Drucker Centennial Forum, to be held in Vienna on November 19 and 20 this year.

The conference is shaping up as a landmark event, where high-calibre academics and practitioners will converge. They are all united by the conviction that the “father of modern management”, who passed away some four years ago, has provided us with a legacy that can help us master the challenges ahead.

The Forum is gaining increasing interest in the global media - the Management Editor of The Economist has recently confirmed his participation as a keynote speaker, for example. The world-class programme of speakers includes contributions from Yves Doz, Doris Drucker, Charles Handy, Fredmund Malik, Philip Kotler, CK Prahalad and Thomas Sattelberger.

We consider this conference as a starting point for a longer-term initiative in which we will leverage Professor Drucker’s seminal thinking as one of the key inputs for re-evaluating management practices and management development.

The current global crisis clearly shows there is no better moment for this fundamental reflection. We urge you to mobilise some of your key faculty and corporate partners to participate in this dialogue - the Vienna Centenary provides a “once in a lifetime” opportunity to contribute to this endeavour.

More information is available at: www.druckersociety.at “Memory and celebration of Peter’s life is important at the occasion of the Centenary. However, in the spirit of Peter, we must put even more emphasis on how to benefit from his legacy in addressing the management challenges in the 21st century” Dr Doris Drucker

Masterstudies is a new EFMD member which specialises in helping schools with their web marketing and student recruitment. The company has expertise in Search Engine Marketing with the main aim of helping schools optimise the time, and more importantly the money, they spend on international marketing and student recruitment.

In our view Masterstudies is one of only a handful of sites that truly understand the power of the web and offers a unique value proposition backed up with a high quality of service.

During the summer Masterstudies offered a free trial of the Masterstudies services for 40 EFMD schools on a first come first served basis. The 40 free places were filled very quickly and Masterstudies would like to extend this free offer to any EFMD business school / executive development centre that is a member of the EFMD network.

“Masterstudies is an effective and unique web-based promotional tool that blends Search Engine Marketing (SEM) with advanced targeted and filtered student recruitment. This allows schools and universities to save money and time on international marketing and student recruitment” Dr Espen Andersen Harvard Alumnus, Professor of IT Management

If your school would like to take part in this offer you will need to contact: Fabien Miard: Fabien@masterstudies.com or Linus Murphy: linus@masterstudies.com If you have any other questions then please contact Matthew Wood: matthew.wood@efmd.org

www.efmd.org/globalfocus

News and events in brief from the business world

Talking shop Free book download Joint EFMD-EURAM Managing the New Frontiers Programme

EQUIS accreditation seminar

EFMD-EURAM have come together to offer a Programme on developing Research Managers: Creating Research Leadership in Europe.

It is important for business schools to contribute to the creation of knowledge. However, each institution is faced with challenges to develop an appropriate research strategy and to implement that strategy. In order to strengthen their members’ capability to develop high-quality research, EFMD and EURAM have joined efforts to offer this Managing the New Frontiers by Jonathan T Scott professional development programme.

(Kozminski University, Bradford University and The programme aims to prepare individuals Audencia Nantes School of Management) in European business and management schools Companies around the world are reducing to step into significant research management their energy and material expenses by 90%, roles through exposure to a wide range of strategic increasing sales by up to 40%, and raising and operational concerns. Particular emphasis productivity 20% or more - with little or no will be placed on preparing individuals for the role capital investment - while watching their costs, of Research Director and in building a community waste and carbon emissions drop like a stone. of research leaders in European business and This book, in plain easy-to-understand language, management schools. shows how.

The programme consists of three compulsory Using a compelling mix of case studies, lecture modules that will all be held at the EFMD premises material, management theory and the input of in Brussels: 5-6 November 2009, 10-11 December recognised efficiency experts, Managing the 2009, 11-12 February 2010.

New Frontiers is being hailed by students, For more information, please contact either: teachers and practitioners alike as a truly Luisa Jaffé, Administrative Coordinator, EURAM: valuable resource. luisa.jaffe@eiasm.be Practitioners enjoy the easy-to-digest format, Robin Hartley Manager, Network Services, EFMD: which simply and clearly explains the essentials robin.hartley@efmd.org needed to initiate a successful efficiency drive.

Students (at undergraduate, postgraduate and executive MBA levels) love the easy-to-read and engaging format. And educators worldwide have relayed their approval of the author’s presentation method, which makes learning the fundamentals of efficiency, sustainability and waste reduction easy and effective.

To download a free copy of Managing the New Frontiers, visit: www.efmd.org/publications

24 November 2009 Brussels, EFMD premises The objective of the accreditation seminar is to give a comprehensive overview of the EQUIS accreditation system. This will involve a detailed look at the practical application of the 10 EQUIS Standards & Criteria / understanding the key stages of the EQUIS accreditation process / making the most of the Self-Assessment Process and preparing an effective SelfAssessment Report / deciding whether you are ready for EQUIS accreditation: gap analysis.

The seminar will provide a very clear picture of the accreditation process and allow participants to explore the options that best suit their school.

The seminar is targeted at both accredited schools that want to gain a better understanding of the Standards & Criteria and those considering EQUIS accreditation for the first time. It will be relevant for Deans and Directors, Directors of External Relations and those responsible for accreditation within a school.

For more information, please contact: catarina.botelho@efmd.org or visit: www.efmd.org/equis

EFMD Global Focus | Volume 03 | Issue 03 2009

The 2009 Emerald / EFMD

Outstanding Doctoral Research Awards International recognition and cash awards for the best doctoral research

Emerald Group Publishing Limited, publisher of the largest collection of international business and management journals, and the European Foundation for Management Development (EFMD), a global membership organization with more than 700 institutional members from academia, business and public services, seek to celebrate excellence in research by sponsoring the 2009 Emerald/EFMD Outstanding Doctoral Research Awards.

Subject categories

Award-winning entries will receive a cash prize of €1,500 (or currency equivalent), a certificate, a winners’ logo to attach to correspondence and the prospect of an offer of publication in the sponsoring journal – as either a full paper or an executive summary – at the discretion of the Editor(s). In addition, a number of Highly Commended Awards will be bestowed. This year there are 12 categories, listed right.

Logistics and Supply Chain Management

Further information Winners will be listed on the websites of both Emerald (www. emeraldinsight.com) and EFMD (www.efmd.org ). Short-listing and further contact will be made during December 2009. Winners will be announced in January 2010. To view this information online, please visit www.emeraldinsight.com/awards

Educational Leadership and Strategy Hospitality Management Human Resource Management Information Science Interdisciplinary Accounting Research Knowledge Management Leadership and Organisation Development Management and Governance Marketing Research Operations and Production Management Property Management

www.efmd.org/globalfocus

How Koç Business School’s Baris Tan is bringing management education in Turkey into the European mainstream. By George Bickerstaffe

B

aris Tan’s passions include management education – he is Dean of the College of Administrative Sciences and Economics (CASE) and Director of the Graduate School of Business (GSB) at Koç University in Turkey (together known generally as the Koç Business School) – and particularly research; table tennis – he played for Fenerbahce, one of the most famous sports clubs in Turkey; and art – he is an excellent draughtsman.

Since becoming Dean two years ago Professor Tan has piloted a strategy of international expansion for Koç, particularly within Europe, a region he sees as both a natural market and benchmarking role model for management education in Turkey.

Affable and youthful, he joined Koç University as a faculty member in 1993 when it was just beginning, with few students and faculty and based in temporary buildings. Today, the university has nearly 4,000 students and nearly 300 faculty members in four colleges and three graduate schools plus a soon-to-open medical school. In 2000 the university moved to a purpose-built campus close to Istanbul.

Professor Tan has a first degree in electrical and electronics engineering and a masters degree in industrial and systems engineering and a PhD in operations research (both gained in America). He became a full professor at Koç in 2002 and dean in 2007. He has also spent sabbaticals in America at both MIT and Harvard.

Surprisingly, becoming an academic was not his primary intention, which was to return to Turkey after completing

Towards Europe: Baris Tan Interview by George Bickerstaffe

EFMD Global Focus | Volume 03 | Issue 03 2009

10 www.efmd.org/globalfocus

his PhD and perhaps join a consulting company before starting his own business.

[Being an academic] “wasn’t my objective at all at first but things just worked out like that,” he says. “But I enjoy my job as an academic. It’s a very fulfilling profession that allows you to develop yourself in the ways you want to.”

Koç University has grown rapidly since its creation and offers great scope for self-development. Its superb campus of 60 buildings on a 25-hectare site outside Istanbul reflects its wealthy and influential connections.

The university was set up by the Vehbi Koç Foundation, a $1.2 billion philanthropic body mainly active in the educational, medical and cultural areas. The Foundation, modelled on the Ford Foundation in America, was endowed in 1969 by the late Vehbi Koç, the founder of what is now Turkey’s Koç Holding group. A dedicated and active philanthropist, Mr Koç wanted to create a university that would provide Turkish students with a world-class education.

We believe that going through EQUIS accreditation has allowed us to learn more about, and from, the European experience, as well as strengthen our links to Europe

Koç Holding is a diversified conglomerate ranging from automotives and white goods to retailing and financial services and Turkey’s largest company. With a turnover of $44.2 billion it ranks 172 on Fortune magazine’s Global 500 list, ahead of such luminaries as Canon, Walt Disney, Lufthansa, McDonald’s, Oracle, Goodyear, Dupont, Apple, Philips and PepsiCo. The Koç family (second and third generations) still controls the company and is said to be Turkey’s richest dynasty.

Inevitably, the college and graduate school are very close to Turkish business with alumni in many leading companies.

In addition, Professor Tan points out that its links to the Koç Foundation send out a message that it is well connected, though he says that the university has been very careful to stress its role as a wide-ranging academic institution and not a corporate university of Koç Holding.

“If you look at the companies recruiting our MBAs, for example, the proportion of Koç companies is not very high even though it is such a large conglomerate,” he says.

Koç Business School won EQUIS accreditation in March 2009, the first school in Turkey to do so.

At the time Professor Tan commented that “this accreditation takes us one step closer to achieving our vision of worldwide recognition with our programmes, students, alumni and faculty.

Our objective in initiating this accreditation process was to conduct a comprehensive self-assessment, to benchmark our performance in different areas with very good international schools and to gain from the expertise of our international colleagues.”

172

Koç Holding has a turnover of $44.2 billion and ranks 172 on Although he says that gaining accreditation was a “substantial Fortune magazine’s Global 500 achievement”, he believes the real benefit has come not from accreditation itself but from the process of achieving it, particularly list, ahead of such luminaries as the self-assessment element and peer review.

Canon, Walt Disney, McDonald’s “The real benefit was having to look at ourselves, questioning and Apple, The Koç family still controls the company and is said the things we do and especially looking at ourselves from an international perspective and asking what differentiates us to be Turkey’s richest dynasty from other business schools and what can we do to establish

Towards Europe: Baris Tan Interview by George Bickerstaffe

11 EFMD Global Focus | Volume 03 | Issue 03 2009

ourselves on the international scene,” he says.

Koç University was set up with the direct intention of educating young Turkish students. However, it has always been extremely international in outlook, encouraging undergraduate overseas exchanges, recruiting international postgraduate students and, perhaps most significantly, insisting that all its programmes at all levels are taught in English.

In less than two decades Koç has become well established in Turkey and is regularly ranked as one of the top universities in the country (though a private institution it operates within the national university system).

The strategy now is to move outside its national borders and in terms of the business school this means, as Professor Tan says, becoming “a leading school in Europe”.

The history of Koç Holding and the Koç Foundation meant that North American models inevitably influenced the business school heavily. Many of the initial faculty had earned their doctorates in North America and programmes were closely based on American approaches. It is only recently, for example, that the Koç MBA programme has moved from an Americanstyle two-year format to a more European-style one year.

As a result, though Koç was eager to obtain international recognition it wavered between opting for accreditation

by American body AACSB International and the EFMD’s EQUIS system.

“Part of the reason for undergoing EQUIS accreditation was to strengthen our links with Europe,” says Professor Tan. “We had good links with business schools in America but less so with those in Europe. So we thought that going through EQUIS would allow us to learn more about, and from, the European experience.”

Professor Tan says that applying for the American AACSB accreditation scheme is not a “top priority” right now, though Koç may think about it in the future. For the moment, though, he adds, “we are a relatively small school and I’d prefer to spend our resources and time on more strategic issues at the moment”.

With effect from December 2009, when its membership will be ratified in the General Assembly, Koç will also join CEMS, a Europe-based network of 28 academic institutions and over 57 corporate partners. Koç University will begin admitting students for the CEMS MIM Programme, a leading pre-experience masters programme, in the academic year 2010-2011.

If the EQUIS process was a learning experience in itself, Professor Tan takes the similar view that Turkey’s long-standing and sometimes controversial relationship with the European Union has in the end been generally beneficial to the country.

Turkey has been an associate member since 1963 and finally began formal accession negotiations in 2005 though these are likely to take at least a decade to finalise.

Over the last two decades or so Turkey has developed from a largely agrarian economy to a more export-led manufacturing base. This has pushed management education up the list of priorities for Turkish companies, according to Professor Tan.

12 www.efmd.org/globalfocus

“The highly competitive world Turkish companies are now operating in means that they value management and business training very much, both for their existing employees and new recruits,” he says.

Turkey is a dynamic economy with a very young population and it is facing some challenging times (though Professor Tan comments that this is “nothing new”). He argues that Turkish companies have developed a “certain competence” in managing in turbulent times because of exposure to very rapid change and economic difficulties, notably long periods of high inflation.

1,500 Koç Business School currently has 1,500 students and 60 fulltime faculty

He says that he has always believed in the potential of Turkey and always wanted to return to the country.

“I think in the 15 years since I came back Turkey has developed quite sensibly,” he says.

The current economic crisis, he comments, is the third he has witnessed since being at Koç. But Turkey’s financial crisis of 2001, the result of the country allowing rampant inflation to take hold, was, he says, worse than the current one – “at least it felt worse.”

But he is not convinced that management education and business schools generally have a responsibility, in terms of what they have taught students, for the financial chaos that spread rapidly around the world in 2008.

He does believe, though, that there is a need for a more interdisciplinary approach to teaching management and business.

“To understand any crisis you don’t just need a management approach,” he says. “You also need to approach it from the perspectives of international relations, political science, economics and so on. That approach is something we are thinking of introducing into our programmes.”

As for the future, Professor Tan says that Koç is now in a time of consolidation after a period of rapid growth and establishing itself in Turkey and, increasingly, internationally.

Professor Tan is limited as dean to two three-year terms, a contract he is almost half-way through. He does not see any huge expansion at the business school (which already has 60 full-time faculty and 1,500 students) in the immediate future.

“Our strategic plan is to keep the size as it is for the next five or six years,” he says, “so we have no plans for further growth.”

What is sure, though, is that all his passions will keep him fully occupied.

Turkish companies have developed a certain competence in managing in turbulent times because of exposure to very rapid change and economic difficulties, notably long periods of high inflation

13 EFMD Global Focus | Volume 03 | Issue 03 2009

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14 www.efmd.org/globalfocus

Can business schools rescue business?

Did business schools cause the economic crisis?

No, says Gerard van Schaik, but they have a key role in determining what comes next

15 EFMD Global Focus | Volume 03 | Issue 03 2009

Can business schools rescue business? by Gerard van Schaik

W

e are in a global economic mess and we know it is manmade. If we want to get out of the present chaos we will have to manage it ourselves; nature will not do it for us.

Crises come and crises go and during any period of insecurity there is invariably an outcry for “change”; change to the law, the rules, the system, our behaviour – you name it.

From all quarters of society come suggestions for what should be done to lead us back to our previous affluence and success.

We see a lot of opportunistic patchwork, not well thought-through legislation, regulation and restructuring. There is a lot of “quick fixing” done so change will mostly be superficial and of a temporary nature.

Having spent my active life in the corporate world I dare to say that approach is partly explained by the fact that line managers – who take the operational steps in organisations – are in general quickly bored with lengthy analyses and time-consuming research.

Moreover, the present generation of managers has been educated to act fast, to “diagnose and cure” quickly using sophisticated toolkits and is conditioned to go for optimal results (both for the business and for themselves) in the shortest period of time.

The call for change is also heard in the world of business education. Business schools ask themselves what the impact of the ongoing crisis is on their own future and the products they bring to market.

Self-reflection is positive. It is very necessary that the academic world looks hard at what it is doing from time to time and probes whether there is cause for revision or drastic overhaul of programmes.

The relationships that are cemented with students of executive development programmes should be used to exchange mutual experience, knowledge and research to discover how the spectrum of the school can be widened and its role in the business world can be enhanced

16 www.efmd.org/globalfocus

I am convinced, however, that the outcome of this process will not be that the knowledge and skills acquired at business schools inevitably produce managers who are doomed to create the type of mess we are now in. Fortunately, we know that is nonsense.

If it were not we would be in a sorry state and schools would have a serious problem.

Much of what has happened in the recent past has to do with dishonesty and immorality. Business schools cannot be blamed for unknowingly having trained and educated a limited number of crooks among tens of thousands of honest, incorruptible managers.

What they could ask themselves, however, is whether they are inclined to sometimes too easily accept as a given the business fads and fashions of the day . Indeed, they may even wonder if they actually help to develop them further without properly researching where it might ultimately lead. Taking the recent past, one can think of such trends as shareholder focus, reward systems, financial product development and others.

If one wants to judge the role of business education in these developments one can ask the question whether business schools have been close enough to their customers to be able to influence or criticise thinking or have they limited themselves solely to their student body?

I am not in a position to judge what action business schools should take to better serve their customers (their customers being society as whole not just their students) in years to come.

I feel that reputable schools around the world have served business and public institutions well in the past and supplied the type of managers business asked for.

The crazy excesses that we saw (and still see in some quarters) in management behaviour such as large scale-fraud, environmental crime, exhibitionistic remuneration and so on are not the product of management education but of the business community itself.

If you introduce business philosophies that focus on shortterm gain and then link them to pay packets that benefit from inflating financial results you should not be surprised that some characters will use every trick in the book to foster their own wealth. If social control on such behaviour is virtually nonexistent it is just a matter of time before things blow up in your face. Codes, rules and regulations may make it more difficult in future for people to behave excessively in this respect but will not prevent it.

In 2000 the concept of global social responsibility was launched, highlighting the fact that the manager of the future would have to consider the strategies and actions of his or her corporation or division in a societal context and not only on a company or industry basis.

During the last decade the shareholder was the idol that had to be served unconditionally as the sole owner of the corporation.

Although this is legally true, we all knew that with this approach business created its own problems.

We are almost 10 years down the road and we are still discussing how the idea should be made operational both in teaching programmes and at a corporate level so that it does not become just a “show” chapter but an integral part of the business plan.

The shareholder is the least faithful of stakeholders in a company and are in nine out of 10 cases corporations or institutions that strive to maximise their own profits. They are interested in share value and dividend and not in the market position or strategic direction of a company they invest in. If they can do a better deal somewhere else they move out, not caring a dime what the long-term consequences are for the corporation when they say goodbye to it.

Although it is now – thanks to the crisis – generally accepted that social responsibility is a core focal point in business a great number of business schools seem to have missed an opportunity to take a lead by being too slow on the uptake.

Although the negatives of abandoning the stakeholder approach and the beatification of the shareholder were already publicly noted in the early 1990s it took two crises before the focus on stakeholders – shareholders being one of them – was actively reintroduced in business schools.

Business life has always known many “fads”. In my active corporate life we have had the period in which production was core, then marketing, financial control, logistics, human resources – each discipline got its turn in prominence. Consultants and business schools were quite often the in stigators of the temporary focus on a certain discipline. But at a certain moment the financial discipline started to overshadow everything. In the process corporate “money ‘became an “objective” instead of a “means” and it still is.

Can business schools rescue business? by Gerard van Schaik

17 EFMD Global Focus | Volume 03 | Issue 03 2009

IMAGES COURTESY OF AIESEC, KELLOGG, THE OPEN UNIVERSITY BUSINESS SCHOOL, ASHRIDGE

2000 The year the concept of global social responsibility was launched, highlighting the fact that the manager of the future would have to consider the strategies and actions of his or her corporation or division in a societal context

If one wants to judge the role of business education in these developments one can ask the question whether business schools have been close enough to their customers to be able to influence or criticise thinking or have they limited themselves solely to their student body? Have they tried to be a counterweight in situations where in their view corporate policies and government actions in general were to the detriment of the long-term welfare of society and the business community?

Most people would say this is not the mission of a business school. It should just deliver well-trained managers who are sensitive of the place in society of the entity they are serving.

I think the latter view is narrowing the field of responsibility of a business school too much.

But how far the business school community should go in trying to participate actively in the operational implementation of the social responsibility concept in the corporation or a public institution is for me an open question. I think they should try to play some role in future through some form of partnership but research will have to help us find out whether such a thing is possible and desirable.

One thing that this crisis is making abundantly clear is the question of whether the business school community (as part

Business schools have a lot to offer through their international networks, their experience with people from different occupations and different cultures and their expertise in enhancing the “quality” of people

of our society) should play a more missionary and a more pro-active role in future. Should it play a “guiding” function with regard to the do’s and don’ts in the business community? I think so.

Business schools have a lot to offer through their international networks, their experience with people from different occupations and different cultures and their expertise in enhancing the “quality” of people. Apart from the many other channels through which they can make their views known, their executive education programmes give them a direct link to a variety of businesses and they should capitalise on this.

These contacts should be exploited to see what’s brewing in society, what new ideas and approaches are developing in the business world, and try to play a role in the discussion. The relationships that are cemented with students of executive development programmes should be used to exchange mutual experience, knowledge and research to discover how the spectrum of the school can be widened and its role in the business world can be enhanced.

IMAGE COURTESY: LONDON BUSINESS SCHOOL

18 www.efmd.org/globalfocus

So now is the time to make it abundantly clear that management as before is no longer acceptable. We want to ensure that the view that the company is part of society and has responsibilities to society at large is preserved. It cannot just consider the interest of its own industry or a limited number of stakeholders.

Business schools have a role to play here. They educate the future generation of managers and can convince them that by managing differently to their predecessors they can secure both the continuity of their business and the trust of society.

We should avoid at all costs governments telling us how we should run our businesses, though the present situation may be tempting for them.

This means: taking the company out of its isolation and putting it slam in the middle of society; demonstrating that by managing a company in a socially responsible way you can still maximise profits, and can still contribute to the welfare of interested parties but also to society at large thus winning the trust and acceptance of the general public and securing the continuity of your business.

If the business school community wants to stay connected and exercise influence on the way our community is managed – and after all their core business is educating managers – then it is essential that they are outward Many things need to be revisited in the programmes that are being taught looking and heard in society. in business schools if we want to take into account the things we learn In the world of business and government no-one cares how business from the chaos we are in. But little of it has to do with management schools are organised internally, whether they publish sufficient articles techniques. It is more a matter of bringing soft skills more to the fore and in reputable journals, what liaisons they have and what research is being emphasising which things are relevant in managing and running a done. That’s their problem. company or an institution that cannot be worked out on a computer.

The outside world is only interested in the variety and quality of the products they offer, the quality of their graduates and their contribution to society. The present crisis has highlighted that there is ample room and reason to play a role in the debate on how businesses should be restructured and run during and after the economic recovery.

There is no doubt in my mind, though, that in spite of all the indignation about moral excesses and the calls for change the moment the economy really picks up again most of that will be forgotten. The corporate world will continue restructuring and control the development of costs but will be busy again with its day-to-day worries and, apart from isolated cases, little if any fundamental change will take place in society.

If we are not careful, steps taken in the field of social responsibility at the company level may drop out of the system and we will chase profits and bonuses in the way we used to.

It is desirable that in the rethinking process that will take place in the business school world creative thinking will dominate and that the “soft” side of business will not be caught and taught in rigid formats but with adequate room for cultural differences and personal convictions .

After all, techniques are a help but ultimately you manage with your guts.

Now more than ever.

Whatever is revisited it is to be hoped that the end result will make business schools more outward looking than ever before, will bring them in permanent close working contact with their market (business or government) and make sure their views are heard in society.

ABOUT THE AUTHOR

Gerard van Schaik is Honorary President of EFMD, Former EFMD President and Former Chairman of the Executive Board of Heineken NV.

19 EFMD Global Focus | Volume 03 | Issue 03 2009

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20 www.efmd.org/globalfocus

The economic crisis has prompted many to call for a greater emphasis on studying the history of business and management.

Morgen Witzel looks at the lessons that could be learned and why they are so important

Why management history matters...

W

e are often told that management, as both a set of practices and a body of theory, has only emerged within the last 100 years or so. The first books on operations management were published in the 1890s; the first texts on marketing and “labour management” (as HRM used to be called) appeared in the following decade. Business strategy did not emerge until the 1960s and it was not until the 1980s that anyone began writing or talking about knowledge management.

Because of this and because the pace of change in the world today is such that management theories and practices are having to be constantly re-invented, it might be assumed that there is not much point in studying the history of management. But that assumption would be wrong.

In fact, although the first coherent bodies of management theory are indeed only about a century old, many of the management practices we use today go back thousands of years.

And although the pace of change is certainly very rapid, some things in management – the need to motivate employees, the need to create value for customers, the need to manage risk – have not changed at all.

Although the first coherent bodies of management theory are indeed only about a century old, many of the management practices we use today go back thousands of years

Why management history matters by Morgan Witzel

Consider the following: – The first text to set out the responsibilities of a manager, The Duties of the Vizier, was written in ancient Egypt more than 3,500 years ago – The first brands – identifying marks on products that gave the customer an assurance of quality and established the maker’s reputation – appeared in China in the 11th century – One of the richest men in Renaissance Italy, Giovanni d’Amerigo Benci, was a professional salaried manager who worked his way up from the position of accounts clerk to become managing partner of the Medici Bank, Europe’s biggest business of its day.

The first modern business school, set up for the purpose of teaching managers to do their jobs efficiently and effectively, was established by the East India Company in 1805, 104 years before the founding of Harvard Business School.

When we look at any of the great monuments of the past – the Egyptian pyramids, the Great Wall of China, the Roman network of roads and towns, the cathedrals of the Middle Ages – we at once find evidence of managers, people whose role was to motivate and guide the efforts of others so as to get things done.

21 EFMD Global Focus | Volume 03 | Issue 03 2009

3500 The first text to set out the responsibilities of a manager, The Duties of the Vizier, was written in ancient Egypt more than 3,500 years ago

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130,000 The 14th century Italian merchant, Francesco Datini, spent half his working life gathering knowledge of markets and trading conditions.

The 130,000 letters he accumulated during his lifetime represent one of the great business archives of all time

Nor were their managerial methods entirely ad hoc. There are plenty of texts on management in many fields – business, civil administration, the military – ranging from ancient Rome to the Middle Ages.

In the early 15th century the Italian theologian Bernardino of Siena set out his own views on managerial competencies. Good managers, he said, had to be efficient; they had to be hard working; they should be willing to assume responsibility; and they should not be afraid to take risks. Five hundred years on, his words are still true.

Fads and fancies in organisations come and go but the basic principles of what an organisation is and what it should do were understood by St Benedict of Nursia in the 6th century when he wrote the rule of the Benedictine Order of monks.

As well as describing the monks’ religious duties, the rule also laid down procedures for reporting and control, stated the overall purpose of the organisation, defined its function and mission, and defined the role of each member of the organisation in helping to achieve its purpose. Similar rules were adopted by other religious orders, hospitals, universities, governments, guilds and businesses, and the same basic model is still in use today.

One of the fundamental concepts of marketing – that it is the consumer not the producer who defines value – was set out by the theologian St Thomas Aquinas in the 13th century. Branding, as we have seen, was invented even earlier. Proto-marketers also knew how to use psychological cues to evoke a response in potential consumers long the before the first theories of marketing – or, for that matter, of psychology – were set out.

The importance of information and knowledge was understood by the Italian merchant Francesco Datini in the late 14th century. Datini estimated he spent

One of the fundamental concepts of marketing – that it is the consumer not the producer who defines value – was set out by the theologian St Thomas Aquinas in the 13th century

half his working life corresponding with other people and gathering knowledge of markets and trading conditions. He carefully archived his letters so that he could go back to them if needed (the 130,000 letters he accumulated during his lifetime represent one of the great business archives of all time).

And hundreds of years before the first books and articles on strategy appeared we can find managers in companies large and small assessing strategic options, scanning the environment and making and implementing strategic plans.

Generic strategies such as product and market diversification were known, and used, for centuries before the age of Igor Ansoff and Michael Porter.

The early academic writers on management closer to our own time knew this. Paul Cherington, first professor of marketing at Harvard Business School, commented that the purpose of his research was to document and record best practice so that it could be taught to others; he made no claim to having invented marketing.

Lyndall Urwick, regarded by some as the founder of management consultancy in Britain, wrote in 1933 that the origins of modern marketing could be traced back at least to the 17th century and probably further.

What does this mean for the modern manager?

There are at least three reasons why knowledge of management in the past is vitally important and has the potential to help managers today and tomorrow to do their jobs more effectively.

First, an understanding of how management was done in the past can help to prevent managers – and consultants and theorists – from reinventing the wheel. This is something to which modern management is very much prone.

In their recent book on management innovations, Giant Steps in Management, Michael Mol and Julian Birkinshaw comment that “rather like the propensity of Hollywood directors for remaking classic movies in contemporary settings, management thinkers are very good at reconceptualizing old ideas, giving them a new twist and packaging them for an audience that wasn’t exposed to the original idea”.

For example, business process re-engineering (BPR), one of the great management fads of the 1990s, was in effect little more than Taylorism (the theory of scientific management developed by Frederick Taylor in the late 19th century) repackaged – “scientific management for the information age” in the words of one critic.

23 EFMD Global Focus | Volume 03 | Issue 03 2009

Why management history matters by Morgan Witzel

History does not have all the answers. But it does have some of them and in uncertain times, anything that can help businesses to survive and prosper should be welcomed And thanks to their lack of experience and knowledge, the re-inventers often end up by building square wheels or ones that will not fit on the axle.

In the late 1990s, many Internet retailers, operating in what they saw as a totally new business environment, discarded the rule books on marketing, convinced that none of the old logic applied. Many, like the now infamous clothing retailer Boo.com, found out too late that this was not so.

They had wonderful websites that attracted customers but they were unable to fulfil orders. The result was widespread customer dissatisfaction.

Had they taken the precaution of looking at a very similar business model developed 100 years earlier by catalogue retailers such as Montgomery Ward and Sears they would have seen the importance of fulfilment and understood the vital role played by distribution.

insights into our own time. What drivers exist today and what managerial responses are being created? How do we as managers respond to pressures by innovating and developing new practices? What determines whether these practices are the right ones and will work?

That leads in turn to the third reason why management history matters.

Many of us assume that the management methods we use today are the best available. They have been studied, tested, analysed by the best academic brains and taught at the best business schools. Therefore, they must represent what the scientific management pioneer Frank Gilbreth once called the “One Best Way” of managing.

Second, studying how management methods and practices have changed (or remain unchanged) helps us to understand the role of change in management. Of central importance is the realisation that every new management method or technique evolves in response to a set of drivers.

But history teaches us that what is right for one place and time, for one company in one set of circumstances will not always work for others.

Management methods do need to change with the times. Those that try to manage using the methods and business models of the past are like generals who prepare to fight the next war using the methods that won the last one.

Some of these come from within organisations: the need for greater efficiency, the need to retain the best employees, the need to use knowledge more effectively and become more innovative, and so on. Others come from external pressures: customer demand, macro-economic forces, changing social priorities, the emergence of new technologies and the like.

History teaches us to challenge the present. Why did the business models and management methods we use today evolve as they did? Why is the prevailing orthodoxy what it is? What other competing models and methods emerged and why were they discarded? Are we really managing in the best possible way that we can?

History teaches us that each set of circumstances generates a managerial response. The very high levels of risk run by businesses in the Middle Ages led to a series of strategic and organisational responses. Many businesses used limited-life partnerships to draw in key strategic partners for short periods of time, remaining flexible so that they could move swiftly to adapt to changing circumstances. They also diversified, across both product ranges and geographies, in order to lay off risks.

It is far too much to claim that the current financial crisis might have been avoided if managers had studied more history (although by encouraging bankers and others to challenge the prevailing orthodoxy it might have helped prevent some mistakes or mitigated their effects).

In the 18th century at the start of the Industrial Revolution firms developed pyramidal hierarchies of management in order to meet the challenges of controlling large centralised organisations. Conversely, in the 19th century the entrepreneur Julius Reuter invented a kind of prototype of the virtual organisation when setting up his international news wire service.

Writing during the Great Depression, the economist John Maynard Keynes wrote that “we must study the present in light of the past for the purposes of the future”. Those words have never been more true.

When we look beyond the techniques and practices of the managers themselves to the drivers that created those practices, we can gain valuable

Morgen Witzel is honorary senior fellow at the University of Exeter Business School in the UK and a senior consultant with the Winthrop Group of business historians. His book Management History: Text and Cases will be published in November 2009 by Routledge.

History does not have all the answers. But it does have some of them and in uncertain times anything that can help businesses to survive and prosper should be welcomed.

ABOUT THE AUTHOR

24 www.efmd.org/globalfocus

Identifying and developing leaders for a global context

The most recent EFMD Sharing Best Practice CLIP Workshop focused on the identification and development of global leaders. Andrew Rutsch presents common challenges and key success factors identified during the workshop

Identifying and developing leaders for a global context by Andrew Rutsch

T

25 EFMD Global Focus | Volume 03 | Issue 03 2009

he current economic crisis has reinforced one insight. The world is more connected and interdependent than ever. Decisions by corporate and public leaders in Sao Paolo and Beijing often have implications that cannot be neglected by decision makers in Paris or New York and vice versa.

As a result, working across borders has further increased in importance and so has the identification and development of leaders capable of doing so.

The most recent EFMD Sharing Best Practice CLIP Workshop hosted by Grupo Santander in March 2009 in Madrid brought over 20 international companies together to explore and discuss this topic.

The main question was: what are the common issues and key success factors that human resources (HR) and learning and development (L&D) should address that will help them make a better contribution towards identifying and developing global leaders?

Grupo Santander, Novartis and Alcatel-Lucent, all CLIP-accredited organisations, highlighted their approaches and group sessions were held to develop an overall point of view. Analysis of the case examples and the session outputs materialised into six key success factors in the effective identification and development of global leaders, which has been complemented by selected research.

The main common challenge found was the globalisation of human resource management (HRM) and its impact on leadership identification and development in response to corporate globalisation.

Globalisation ranged from moving more aggressively into emerging markets, especially BRIC (Brazil, Russia, India and China) markets, integrating international acquisitions, moving from a regionalised organisation to one globally aligned along core business processes and to evolving from a headquarter-centric to a globally integrated organisation.

The presentations and discussions in the work sessions showed that each firm had its own recipe and way forward that is in line with recent (2005) research by Chris Brewster, Paul Sparrow and Hilary Harris published in the International Journal of Human Resource Management studying the nature of change in global HRM and arguing that companies adopt several recipes for globalising their HRM functions.

The six key success factors identified are:

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1. Strategic alignment Alignment with corporate strategy and local business strategies furthers leadership behaviour in the interest of the overall organisation. A targeted balance can be achieved through a governance framework that directs strategic decision making and control.

All three presenting companies at the Madrid workshop have put in place governance structures that ensure integration of local decision making with priorities at the corporate level.

For example, local managers identify local talents carrying out the talent management process bottom-up that then integrates with the business unit and corporate level for topdown calibration and validation.

The strategic role of one of the companies’ corporate learning organisation is reflected through a targeted corporate learning strategy.

It runs learning programmes that are linked with organisation-wide priorities; it supports strategic growth initiatives in regions such as China, Russia and Latin America, and it ensures alignment with other internal training and learning functions.

Strategic alignment was also discussed from a content point of view.

2. Executive engagement Engaging senior and top executives in leadership identification and development along the whole value chain to build buy-in and strategic alignment is a further key success factor.

For example, in one company 50% of the top 500 executives are from the headquarters’ home country and 3% at top executive level are women.

It is addressing this diversity and culture challenge through development and mobility committees for the top 200 population. These are held on a monthly basis and on average discuss 15 individuals in order to drive the necessary development steps for them and for the leader population as a whole.

Top management owns and drives this process facilitated by HR and L&D. That way, it plays a significant role in leading and validating the active management of the global population of leaders from a truly business point of view.

The results of a survey by Groves presented in the Journal of Management Development in 2007 refers to growing evidence that companies are increasingly engaging management in leadership development and argue that many CEOs at leading companies such as GE, 3M and Nokia have adopted the executive-led model of developing leaders.

The notion of building behavioural capability to concurrently demonstrate alignment and adaptability as a driver of organisational success is supported by Gibson and Birkinshaw in an article in the Academy of Management Journal in 2004.

True strategic alignment implies identifying and developing leaders demonstrating both transactional leadership, aligning and executing the current strategy, as well as transformational leadership, evolving and adapting the strategy concurrently.

This is particularly important in public companies complying with the demand for quarterly financial results while attempting to pursue a long-term approach. In other words, preparing and developing ambidextrous leaders for both the short-term and long-term is pivotal.

Alignment with corporate strategy and local business strategies furthers leadership behaviour in the interest of the overall organisation

3. Integrated talent management Identification and development of global leaders and their successors requires an integrated framework ensuring that this population is comprehensively managed.

In particular, alignment of corporate L&D and HR with local L&D and HR is important.

All three companies in Madrid presented evidence of close collaboration. This was reinforced through L&D being part of HR to ensure global policies and standards.

For example, one company’s corporate university works closely with the Organisation and Talent Review Group through the Organisation People Review process.

Another has put Learning and Knowledge as one of its six HR policy areas in a global learning model. This runs a corporate managerial curriculum that integrates with the local and global talent management processes, involves top executives and runs a corporate university as development provider for the top 200 executives.

The third company’s model is similar with an Organisation and Talent Review Process facilitated by HR and linked with corporate learning design and implementation.

However, from a process perspective these and other examples that emerged during the workshop suggest industrialised planning and managing for talent supply. This approach has its roots in engineering and implies that certainty can be achieved through planning.

One could argue, however, that this is an outdated notion. What happens with those talents that have been developed (at some cost) but are no longer needed when times turn bad?

Peter Cappelli, in a Harvard Business Review article in 2008, asserts that it is time for a fundamentally new approach to talent management taking into account the great uncertainty businesses face today. He suggests a talent-on-demand framework borrowing lessons from supply chain management by managing talent needs.

Identifying and developing leaders for a global context by Andrew Rutsch

4. Standardisation versus centralisation Global guidelines and standards, ideally supported through an integrated HR IT system, ensure that focus and resources are allocated to the right activities and that global consistency and required quality are attained.

One key success factor across the workshop participants confirms the importance of having and managing a standardised model to identify and develop leaders for a global context.

Examples are globally consistent process and assessment criteria that drive the design and delivery of tailored learning offerings.

One could argue that this implies a centralised approach but a closer look reveals a more differentiated picture. As one company in Madrid showed, while its framework and process are standardised it is run by different people across different organisational levels and borders.

This approach is supported by Ghoshal and Gratton in their MIT Sloan Management Review article in 2002 in which they propose different ways of horizontally integrating companies and building cohesion without hierarchy. One of them is operational integration through a standardised technological infrastructure. This need for standardisation grows with increasing complexity, especially in global and diversified companies.

5. Business partnering Business partnering and planning supports sustainable implementation of global leader identification and development. Generally this incorporates strategic HR and L&D objectives, measures and resources as well as evaluation through key performance indicators validated by top management.

One key challenge mentioned several times in Madrid was the need to increase further the role of HR and L&D as strategic business partners displaying better collaboration and consulting skills at the executive level and demonstrating a clear value proposition towards identifying and developing global leaders.

27 EFMD Global Focus | Volume 03 | Issue 03 2009

6. Global competency development Development of global leadership competencies that apply across a company and are capable of dealing with diversity in its different forms is vital when building the fundamentals of global leadership.

All three presenting firms in Madrid and many more in the work sessions reported the challenge of building and fostering global leadership competencies driven and required by the globalising businesses of their organisations.

One firm at the workshop reported differences in thinking, problem solving and business processes in emerging compared with developed markets.

Evolution of the role of HR and L&D into true business partners furthers a strategic dialogue with the business and makes sure that necessary HR and L&D capabilities are allocated to those activities with the biggest impact.

It responds to them by facilitating crossdivisional interaction and collaboration, strengthening the company culture and aiming at changing the local prevailing mindset through a targeted corporate learning strategy.

A business partnering approach is particularly required when it is concerned with identifying and developing leaders for a global context who have a big impact on the profit and loss of a company and who are able to both execute the current strategy in the short-term while evolving it in the long-term.

The corporate university of another company runs immersion programmes in target markets where the company has significant interests and low cultural competence in partnership with local nongovernmental organisations (NGOs) and communities. And it utilises employees within its high-potentials and key performer programme supported by cultural readiness training.

Development of global leadership competencies that apply across a company and are capable of dealing with diversity in its different forms is vital when building the fundamentals of global leadership

In contrast to the advantage of global consistency touched on above, organisations moving towards universal leadership competency models are at risk of failing to recognise that leadership requirements vary by level, culture and situation as claimed by Conger and Ready in a 2004 article in the Leader to Leader Journal.

They suggest linking leadership competency requirements to a simple and future-driven view of the company’s strategic and organisational capabilities. For example, if the company’s strategy is to grow through acquisitions then it would be well advised to develop strong capabilities at acquisition integration at a global level.

While every company has its own recipe, the key success factors put forward might help one company rethink its current practices while another might be confirmed in the journey it has embarked on.

ABOUT THE AUTHOR

Andrew Rutsch is Program Director Corporate Learning Improvement at Capgemini University

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Mixing degree and non-degree management education is often a sign of profit seeking rather than innovative teaching argues Ulrich Hommel

Executive education is an important source of innovation for any business school by providing a testing ground for applied research and by stimulating the corporate relevance of for-degree teaching

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Blurring the edges by Ulrich Hommel

B

usiness schools typically treat degree and non-degree teaching as very distinct activities and many even separate them institutionally for strategic, legal or tax reasons. These boundaries have, however, become increasingly blurred in recent years as more and more institutions have begun to experiment with integrative approaches that effectively assign academic credit to non-degree training.

No doubt executive education is an important source of innovation for any business school by providing a testing ground for applied research and by stimulating the corporate relevance of for-degree teaching. But re-labelling executive training as academic education extends well beyond capturing these narrow benefits and seems to be, above all, a response to rising competitive pressures and tightening school budgets.

Recent EPAS accreditation experience [EPAS is the EFMD Programme Accreditation System for international degree programmes in business and management] has uncovered a variety of alternative models implemented by business schools, all of them reflecting a revenue-seeking motive but targeting different aspects of the executive education business.

The potentially most flagrant variant is the “modular model”, which defines an executive degree programme (normally the Executive MBA or EMBA) as a combination of several non-degree certificate courses that should be taken in a certain sequential order but not necessarily consecutively. Granting students additional degrees of freedom over the ordering can be observed as well and is also used by many istitutions as a marketing instrument for their part-time students. As past tuition expenses represent a sunk cost, the cost-benefit calculation of participants moving along in the modular sequence is increasingly tilted towards completing the entire programme.

In other words, business schools use professionally recognised certificates as a form of almost “instant gratification” and thereby partition the actual programme entry decision into financially more palatable chunks. It can be questioned whether the module certificates are assessed at degree (EMBA) level and whether the modules are always designed to meet topical market demands rather than the intended learning outcomes (ILOs) at the programme level.

An alternative approach is the “specialisation model”, which utilises the breadth of a school’s executive education activities to offer a rich set of electives for EMBA students. It is particularly useful for enhancing the perceived brand value of marginally successful programmes that generate insufficient tuition income to support electives on a stand-alone basis.

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The key question is whether the electives convey specialised knowledge with appropriate academic rigour or whether they rather represent a form of ‘edutainment’ Schools even have the added option of awarding track-specific “specialised MBA” degrees that, while being inconsistent with the general management focus of MBA education, are nevertheless a popular choice by Continental European business schools.

First and foremost, executive education based degree education is unlikely to offer the same level of academic rigour as regular programmes. While academic courses are generally taught over a longer period by one faculty member, executive education tends to rely on hit-and-run faculty covering a day or even less of In this context, the key question is training. They are “hired hands” with a whether the electives convey specialised concern for the proper delivery of their knowledge with appropriate academic part rather than the achievement of rigour or whether they rather represent programme-level ILOs. a form of “edutainment”.

Mixing degree and non-degree students Finally, the “recruiting model” utilises in one classroom is detrimental to the a business school’s diverse executive learning environment as well. While education activities as a recruiting ground executive education customers are likely for its EMBA programme. Participants to view class sessions as a day away from enter the system via certificate programmes the job, degree students are looking for with, for example, a functional or sectoral the next piece in the mosaic that helps specialisation. them to develop a bigger picture of what Successful completion comes with the general management is all about. added bonus of providing access to a Following the German sociologist and capstone general management programme political economist Max Weber, they that leads to the actual awarding of the differ fundamentally in their willingness academic degree. This approach comes to engage in the “persistent drilling of with the odd property that participants hard wood with passion and perspective”. receive specialised training prior to being Due to the “credence good” character exposed to general management concepts. of academic education, degree students It is especially attractive for business schools are also notoriously unable to enforce with well-established executive education minimum academic standards by activities that serve as marketing channels “voting with their feet”. for the academic programme.

Many executive education participants All three variants are likely to provide seem to fall into the popular trap of business schools with short-term equating “absence of theory” with quality. economic gains, which can either be Teaching theoretical concepts without used to cover existing performance professional relevance is certainly deficits or fund overly ambitious growth undesirable. Students should, however, initiatives in the face of limited resources. be enabled to acquire extensive problemA closer examination, however, raises solving skills that move them beyond a number of issues from a programme “managing by case study experience” quality perspective. in their professional careers.

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Blurring the edges by Ulrich Hommel

Faculty ownership of the programme is likely to be an issue as well. Fragmented teaching assignments on a for-hire basis remove the faculty from overall programme operations (especially if the school relies heavily on fly-in faculty).

In many instances professional staff assume the de facto role of programme managers with their focus typically placed on the provision of adequate service quality. However, they tend to be insufficiently qualified to compensate for the lack of academic faculty guidance.

The negative impact on programme operations can be potentially far-reaching, ranging from the inability to maintain an orderly programme review process to an ad hoc approach when it comes to managing the proper mix of pedagogical methods or to fostering the systematic inclusion of pedagogical innovation.

There are also concerns about the admission policies maintained by the programme staff. Unless acceptance into the programme is based on externally validated criteria (for example minimum GMAT scores), academic considerations are likely to be overtaken by revenue seeking, especially in times of market turbulence.

After all, the primary motivation of a mixed approach is to market executive education activities by adding on the awarding of an academic degree. Needless to say, the quality of the degree output is always reflected in the quality of the incoming student body and vice versa.

In sum, the negative impact of mixing degree and non-degree education can ultimately extend to all facets of the programme as laid out in the EPAS Value

Model. It is certainly feasible to design a mixed model with standards more in line with traditional degree programmes.

But unless the entire structure is firmly embedded in a business school’s academic programme portfolio in all management dimensions (and there are obvious impediments against doing so), quality standards are likely to converge at least partially to a more typical executive education format.

Whenever the EPAS Committee and Accreditation Board have encountered such cases in the past, they have not judged the fuzzy boundaries very favourably.

Indeed, one must wonder whether business schools pushing for more permeability between degree and nondegree education are potentially operating on the wrong side of an acceptable trade-off between long-term academic sustainability and short-term financial gains.

This article represent the author’s personal conclusions based on recent EPAS accreditation activities and should therefore not be mistaken as an “official” interpretation of EPAS Standards and Criteria. The author thanks Chris Greensted and Julio Urgel, respectively Associate Director and Director, Quality Services, EFMD, for helpful comments and suggestions. The usual disclaimer applies.

ABOUT THE AUTHOR

Professor Ulrich Hommel is Associate Director and EPAS Co-Director, Quality Services, EFMD

Unless acceptance into a programme is based on externally validated criteria (for example minimum GMAT scores), academic considerations are likely to be overtaken by revenue seeking, especially in times of market turbulence

32 www.efmd.org/globalfocus

We all want and need creativity in our personal lives and at work. But how can we nurture, encourage and use creativity successfully? Patrick Harris offers some suggestions

Creative thinking by Patrick Harris

C

reativity is a skill; a talent. It can make the difference between failure and success. It is sought by many organisations but only a rare handful reach the Holy Grail of becoming creative exemplars – Google’s buzzing campus life, Apple’s super-cool products and Patagonia’s laid-back outlook are just a few.

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Without a state of mind that is ready to explore and expand on creative ideas, you severely limit the journey that you can take

Creativity in organisations should usually be directed at a specific problem or desired outcome. This could be to invigorate the workplace, motivate employees One way to stimulate a creative mindset is to avoid or to produce sought-after products and services. the typical focus of organisations on what is and to But what exactly is required from creativity in ask, instead, what if questions. Doing this regularly organisations – and the people in them – to realise tests your ability to see things anew. their aims? How can they apply creativity to avoid sterile working patterns, make the most of their collective talent and turn ideas into profitable solutions that delight customers? A few areas are key in answering these questions: Developing a creative mindset Having a creative mindset is like fuelling a car before a journey. Fuel is rarely the focus of the journey but you would not get anywhere without it. The situation is the same for a creative mindset.

It provides you with opportunities to have creative moments – occasions where two or more ideas are assembled in new and interesting combinations.

Without a state of mind that is ready to explore and expand on creative ideas, you severely limit the journey that you can take.

Over the long term a what if emphasis might involve learning a new skill. In the shorter term it could be something as simple as taking a new route to the office or reading a different newspaper for a few weeks.

Stepping away from your comfort zone – your natural thinking home – is also a powerful way to develop a creative frame of mind. Everyone gets stuck into routine so following an alternative line of thought is an ideal tonic to refresh your perspective. When stepping away from your comfort zone, try to avoid linear thinking. Change, after all, can be either evolutionary or entirely revolutionary. Try also to broaden your perspective by looking beyond traditional routes and beliefs.

There are other ways to develop a creative mindset, too, such as improving your listening skills, applying principles to guide your creative efforts or by using your left-brain, logical self to set aside more time for your right-brain, creative self.

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Employing creative characteristics If having the right mindset is the fuel that you need to begin your journey, creative characteristics are the engine that keeps you moving towards your destination.

Having a solid set of creative characteristics to depend on helps to convert creative moments into inventive solutions.

In many organisations, creative acts are usually expressed as brainstorming – sessions designed to generate lots of ideas in quick time. Brainstorming is indeed a wonderful activity with a successful track record but it is not the only creative technique in the cupboard.

Consider metaphors, for example.

Simply by drawing out similar aspects of seemingly unlike things you can uncover powerful explanation, see new creative linkages, unblock thinking and introduce a broader perspective.

The method that you apply to construct metaphors can also be creative. Metaphors are commonplace in language, of course, but can also be expressed in drawing, model building, or even in producing films and music.

Challenging rules is another excellent characteristic to employ.

Many rules are necessary and are in place for good reason but others can be there because they are outdated, too difficult to tackle or are simply “the way that things are done around here”.

Other rules might be in place because the subject matter is seen as taboo in the organisation, even if no one can recall quite why this is the case. Challenging these rules can be a great route into exciting and highly rewarding creative solutions.

A tricky taboo topic emerged when I worked with Shakespeare’s Globe, the iconic theatre on London’s Bankside.

From the start, it was easy to see that entering the site was less glamorous than could be expected. Two entrances were used but the primary route was ignored. Worse, the primary route is a spectacular entrance through wrought iron gates that face the River Thames and its throngs of strolling visitors.

The entrance had been closed because site operational staff were afraid that the premises would be exposed to graffiti,

unscrupulous visitors and unhelpful traffic flow. Opening the gates was a taboo topic; one that no one believed could be challenged.

So, taking a gamble, I opened the gates one day. Staff condemned and praised the action in equal numbers. Visitors, however, walked into the place as naturally as if they had been doing it for years.

Afterwards, a trial opening period was held, proving that the open gates attracted more people. The result is that the gates are now open each year during the key visitor seasons. The previous 10 years of worries – vandalism, revenue and traffic flow – were solved, too, just by adding a short piece of red barrier rope and moving a security desk by a few feet.

Finally, when considering sources of creative characteristics, do not forget to look at failure.

So much of what we are tuned in to learn from is about success. Success teaches you how to be successful, sure. But failure teaches you what you still need to learn. There is always huge opportunity to learn from failure unless you fail to recognise when it has happened or if you choose to leave it unexplored.

Creativity at work Creativity in the workplace should not be a completely free-form activity but it need not be a complex process either.

A little process goes a long way when undertaking creative activity in organisations. Even a small amount of order can ensure that you are investigating causes rather than symptoms, which saves time and money while keeping your creative work on track. You can also set appropriate limits on otherwise limitless thinking.

These limits could be as simple as: – Frame the topic you are interested in – Name the type of challenge you want to conduct, for example, research, quest, competition, thought leadership –Involve the people and resources that you need Because your organisation will someday want to turn an idea into a fully-fledged product or service, you should be able to test the validity of ideas with quick, five-minute business plans.

Five-minute plans give some initial scope to ideas while highlighting major obstacles and opportunities. They provide some basis for early stage evaluation. Later on you can make

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Creative thinking by Patrick Harris

more robust plans once you settle on a few winning ideas to take forward.

Creativity at work does not have to be expensive either.

The basic ingredients of a creative endeavour should include engagement, interaction, flexibility and visibility. By involving colleagues and then using some free wall space and a few sticky notes your creative effort can meet these four criteria, be shared with the whole office and you will have spent less than if you had bought lunch for the boss.

Teams that create Creative teams are special. They are groups of people who are not afraid to ask difficult questions and to explore unknowns.

How do they do this?

For a start, creative teams celebrate diversity in several forms – such as experience, nationality, perspective and thinking styles. Creative teams also read widely. They understand the value of reading (and other media) as a window onto the world and they share what they have read between them.

In creative teams, a shared purpose is usually present.

More than this, the shared purpose was likely developed, or built upon, by the team members themselves. It is a belief that everyone in the team feels to be true and which is critically important to the overall success of the group.

acceptance and execution of the idea. Without these elements, the idea is valueless and can remain forgotten, stuck on a dusty shelf indefinitely. Furthermore, creative acts in organisations need to be recognised and rewarded. This could be for progress achieved, co-operation with others, successful outcomes or just for developing winning ideas.

As the world emerges from the Information Age and organisations aim to apply their resources in the best way possible, it is clear that managing the collective talent of firms will be key.

We are entering an age – the Talent Age – of recognising and utilising talent. This age requires organisations to think a little differently; to behave less like out-of-touch behemoths that force products and customers into artificial segments and, instead, to behave more like the tribes of customers that they serve.

At the most basic level, organisations need to observe the interesting and inventive things that people do and then boldly act on those observations. They need to be agile, adaptive and anticipative. This is a big step for some companies that are still getting to grips with anodyne business planning processes, flexible working and casual dress Fridays.

Creative teams are special. They are groups of people who are not afraid to ask difficult questions and to explore unknowns

But more than anything, creative success in organisations relies on individuals speaking out for changes that they want to see and to take responsibility for the development of their own creative spirit.

But this is not all. Creative teams know how to Creativity is a personal and timeless exercise, build and sustain momentum. They recognise that innate within all of us, waiting to be used. The question creative cultures are not prescribed; they are instead carefully that remains is how will you nurture your creative spirit today nurtured by supporting desired behaviours. The team members in order to help your organisation build new and imaginative themselves are not afraid to bring glimpses of their private solutions tomorrow? lives into the group as well. Personal passions – hobbies and interests – are shared and discussed.

And last, but by no means least, humour tends to thrive in creative teams. Humour that is well timed and aptly placed can counter stress, reveal personal qualities and help form new combinations of ideas.

ABOUT THE AUTHOR

Creative success This is what it is all about. Having creativity in an organisation is not worth a bean unless it produces the results sought after.

Patrick Harris is founder of thoughtengine, a consultancy focusing on creativity, strategy, brand and futures. He is the former Director of Creaticity at Orange, a non-executive Director of France Telecom UK R&D and is currently a Director of Medinge, a brand think tank aimed at furthering the humanitarian efforts of brands and their organisations. His book, The Truth About Creativity, was published in 2009.

In fact, the true value of an idea is a function of the quality,

Email: patrick@thoughtengine.co.uk

36 www.efmd.org/globalfocus

Is the crisis all the fault of business schools? Lots of people are saying so. But Franklyn Salimbene argues that they had already started to act and that involving students in community service via ‘service-learning’ has begun to have an effect

Teaching social responsibility through service-learning

Are we responsible?

S

tock markets have crashed. Pensions and other investments have been denuded. Home values have plummeted.

Unemployment has risen to levels not seen since the 1930s.

As we watch this story continue to unfold in 2009, we have also come to learn that the global financial house was governed in many instances by nonfeasance, misfeasance and even malfeasance.

Individual and corporate greed, evidenced by large and often undeserved executive bonuses as well as egregious risk-taking with other people’s money, was rampant.

Governments were often asleep at the wheel either ideologically tied to worn out laissez-faire attitudes or unwilling to spend the money necessary to carry out their regulatory functions. The result – an economic and financial debacle with worldwide effects.

For those of us in business education the current economic and financial catastrophe raises some uncomfortable questions. It is fair to say that many business leaders who encouraged and implemented policies inimical to the public interest were graduates of business schools. Such a fact is sufficient to send chills up academe’s spine.

It is fair to say that many business leaders who encouraged and implemented policies inimical to the public interest were graduates of business schools

Where did we go wrong? What could we have done to direct more effectively today’s business leaders along the paths of ethical behaviour and social responsibility while they were our students? What lessons should we take from the debacle as we contemplate new or revised curricular initiatives and programmes at our universities?

As we consider our answers to these and other similar questions we should take encouragement from initiatives within EFMD and at some EFMD-accredited institutions.

Teaching social responsibility through service-learning by Franklyn Salimbene

37 EFMD Global Focus | Volume 03 | Issue 03 2009

In 2007, for example, EFMD sponsored a conference on undergraduate management education, the title of which was “The Role of the Business School in Developing a Complete Student”. Convened by Groupe ESC Rouen, the theme of the conference focused on programmes that business schools could implement in order to develop their students not only intellectually as business professionals but also holistically as complete persons, as individuals who have personal and societal interests and needs that stretch beyond the business world. One such programme presented at Rouen, “service-learning”, was proposed by Bentley University.

Bentley was well placed to make its service-learning proposal as it is recognised in America and Europe as a leader in service-learning pedagogy. US News and World Report, the Princeton Review and the Carnegie Foundation have all identified Bentley’s service-learning programme as among the top such programmes in America.

Further, when the undergraduate Quinn School of Business at University College Dublin in Eire sought to develop its own service-learning programme in 2004, it called on Bentley’s expertise to assist it in conceiving and designing a programme for both its internal and study-abroad students.

Broadly speaking, service-learning is an academic programme through which students enhance their classroom learning by providing meaningful service to the wider community beyond their university’s boundaries. Through their participation in an organised and academically focused service programme, students are encouraged to reflect upon that service so as to improve their understanding of course content, to measure their own personal and professional skill sets, to assess their individual value structures, to appreciate wider societal needs and to foster in them a sense of civic responsibility.

80% More than 80% of participants agreed or strongly agreed that the service-learning project had taught them things that they probably would not have learned in the classroom

IMAGE COURTESY: BENTLEY UNIVERSITY

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In these areas, research completed by a number of educators engaged in service-learning pedagogy finds that service-learning can have a positive impact on the academic and personal development of students.

Three stakeholders central to service-learning pedagogy are faculty, community organisations and students.

Faculty provide the academic context within which service-learning occurs. Course design and delivery offer the credit-bearing educational platform upon which the service activity rests. The educational platform can require a range of academic deliverables that enhance classroom learning. These deliverables include written reports, class presentations and student-led panels and discussions. In each instance, the goal is to enable students to evaluate and assess the service experience as an element of their academic learning and their personal development.

The second service-learning stakeholder is the community organisation.

Commonly referred to as the “community partner,” these organisations are typically not-for-profit entities such as social service agencies, philanthropic institutions and governmental bodies.

Working in collaboration with the faculty member, the community partner provides a service project that meets an important community need. That need may involve working directly with the clients of the community partner, for example, teaching children to read, assisting the disabled to integrate more fully into society and helping the elderly to cross the digital divide.

The community need may also involve assisting the community partner itself to build its own organisational capacity to deliver more effectively its service to the community.

Such capacity-building service projects, which can include business plans, website designs, marketing research, promotional strategies and database development among others, are ideal methods for connecting business students with wider societal interests and issues thereby cultivating within them a sense of social responsibility.

The student as the third stakeholder delivers the service and takes the learning from

Business schools are uniquely situated to impress upon students early in their professional and personal development that they have a responsibility to themselves and to the societies within which they live

Teaching social responsibility through service-learning by Franklyn Salimbene

39 EFMD Global Focus | Volume 03 | Issue 03 2009

it. Assisting in this process, the faculty member and community partner together help the student to reflect on that service and its meaning.

As already noted, research indicates that effective service-learning pedagogy where faculty, community partners and students work in concert to develop, design and implement a project has a positive impact on students’ academic and personal development. Bentley’s experience in service-learning verifies these impacts.

At the close of each semester, the Bentley Service-Learning Center (BSLC), which co-ordinates service-learning at Bentley, conducts a survey of all students who participated in service-learning. The number of students who do so usually ranges between 300 and 500. The response rate to the survey is consistently above 90%.

The survey falls roughly into three categories: academic – what has the student learned about the course material? social – what has the student learned about society? and personal – what has the student learned about himself or herself?

Generally speaking, in each category students responses indicate positive impacts.

For example, academically students highly rate their service-learning project as enhancing their learning of course material. Taken over the last three years roughly two-thirds to three-quarters of students surveyed confirm that their servicelearning project has resulted in a deeper understanding of the course. Further, more than 80% agree or strongly agree that the project has taught them things that they probably would not have learned in the classroom.

Socially, survey results indicate that the service experience opens students’ eyes to the wider community. It informs them of the diversity within society, a diversity which they will need to understand and welcome if they are to be good professionals and good citizens. Survey results also reveal that students appreciate not only the important work that is being done in the community by partner organisations but also that there is important work to be done.

On a personal level, students also indicate positive impacts. Their service helps them to learn more about who they are, helps them to make decisions about what they want to study or what careers they will ultimately seek and helps to improve their verbal and interpersonal communication skills.

Overall, student experience in service-learning courses is such that consistently more than 85% hope to be able to take another service-learning course during their academic career.

While no one programme can be the universal panacea for assisting business schools in raising the level of student sensitivity to the need for socially responsible behaviour, service-learning has played and can play an important role in that direction.

IMAGE COURTESY: BENTLEY UNIVERSITY

Business schools are uniquely situated to impress upon students early in their professional and personal development that business professionals have a responsibility not only to their companies but also to themselves and to the societies within which they live. A business school that incorporates service-learning into its curriculum can take a giant step toward driving home that lesson.

ABOUT THE AUTHOR

Franklyn P Salimbene, JD, LLM, is Director of the Bentley Service-Learning Center and Senior Lecturer in Law, Bentley University, US.

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What makes a Low Cost business work? Martín Vivancos outlines the key business factors behind the success of Low Cost businesses such as easyJet, Ikea, Ryanair and Wal-Mart

W

hat do Sam Walton, Teo and Kart Albrecht, Ingvar Kamprad, Michael Dell and Amancio Ortega have in common? All of them are on the ‘Forbes’ List of the world’s richest men. Moreover, Wal-Mart, Aldi, Ikea, Dell and Zara are all businesses that follow the Low Cost concept.

The motto of a Low Cost strategy is “Less is More”. By offering fewer services or products at a lower cost, they actually become more highly valued compared with market alternatives.

Low Cost represents the “horizontalisation” of supply – supply that gives larger strata of a population access to products or services thanks to its low-price policy.

It is a phenomenon that extends affluence to new social segments, ushering in the democratisation of consumerism.

This model breaks away from the paradigm that cheap is synonymous with little value and redefines the relationship between price and value in an innovative way.

Another key strategic tenet of the Low Cost model is understanding how to quantify the value perceived by the customer as a premise for defining and optimising price.

Value and price are two different though interrelated and determining factors of the purchasing process. Figure 1 (right) shows the various connections between these two factors and their effects on the act of purchase.

The high value and low price relationship is the one that characterises Low Cost, given that this option involves reducing the cost but not the value (because it is based on the premise of knowing what is important and what is dispensable for the customer: Value x Money).

The Low Cost model bases its success on achieving the following: By offering a lower cost for its products it has increased the purchasing power of a mass lower-middle class market, guaranteeing access to goods and services previously reserved to more affluent social classes. With this increased purchasing power Low Cost has become a springboard for consumption and possibly an “augmenter” of affluence.

By acknowledging that people do not want to pay for things they don’t want it entails knowing what is essential and what is complementary, knowing what is basic and what is dispensable, finding out what is really necessary and what is not.

The general characteristic features that could help us to define a Low Cost business model are outlined below in more detail:

Low cost, high return: what makes a Low Cost business work? by Martín Vivancos

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Less is more – by offering fewer services or products at a lower cost, they actually become more highly valued compared with market alternatives

Value v Price

HIGH

Figure 1

LOW

PRICE

Low value and high price = NO PURCHASE

Low value and low price = NO PURCHASE or POSSIBLE PURCHASE

LOW

High value and high price = POSSIBLE PURCHASE

High value and low price = ACT OF PURCHASE VALUE

HIGH

It provides a basic product or service It is essential to provide a basic product or service. Everything that is not essential, core or the reason for being of the product or service is done away with.

This involves removing all the frills. On the other hand, providing a basic product may enable us to generate extra revenue through contracting complementary services (charging for the frills).

assembly. Easyjet’s success was based on logistics that enabled its planes to be ready for a new flight in less time than those of a traditional airline.

Profits derived from economies of scale of production processes Low Cost businesses need to take advantage of the economies of scale generated from large-volume production. In fact, economies of scale are a key factor in any general strategy based on costs.

depending on the needs of customer in relation to the company’s available capacity. At easyPizza.com, it is cheaper to order a pizza in off-peak hours than during peak hours in the same way that in easyCinema a latest release film does not cost the same as an older one.

Optimal information systems design and management An efficient information system ensures direct just-in-time communication between production and consumption centres. Technology is crucial to this information-gathering process, which A standardised model aims to adapt the product to real demand as well Operational efficiency and economies of scale are made as to optimise operations and logistics costs. In possible thanks to a standardised product or service. the services sector, specially designed information systems enable optimal price management in Targeted at mass markets The Low Cost model’s pricing policy has an effect line with existing demand (yield management). on the source of profits, which is not to be found in Price is not a static but a dynamic variable margins but in overall turnover, whether turnover Price need not necessarily be conceived as something on the shelves or the capacity to offer a service rigid. A dynamic conception of price does not expediently so as to be ready to offer a new one. In exclusively reflect costs and profit but is also related both cases, this means targeting mass markets with to the opportunity of the moment. Price can be sufficient potential market size that will guarantee modified dynamically depending on the moment, a certain level of demand. the urgency, the opportunity of the moment, in short,

Logistics and business operations take on critical importance as efficiency-generating aspects Low Cost is not achieved through lowering quality but through efficient operational management.

A company’s internal operations management is the source of lowering costs. Ikea’s use of flat pack packaging means fewer transport and warehousing costs as well as involving customers in transport and

Growing markets A key variable in the Low Cost model seems to be that of avoiding mature markets and targeting emerging markets. India, China and Russia put together represent a market of three billion “new capitalists”. In the airline sector almost 39% of the eight million people who catch a plane on any given day come from Asia and the Pacific, where air travel is growing at a rate of 35% per annum.

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27% In April 2008 the number of passenger arrivals in Spain on Low Cost carriers increased to 17%, which amounts to a 27% increase in market share for Low Cost carriers and a 4% decrease for traditional airlines

Closer to home, in April 2008 the number of passenger arrivals in Spain on Low Cost carriers increased by 17% whereas traditional airline carried 12% fewer passengers amounting to a 27% increase in market share for Low Cost carriers and a 4% decrease for traditional airlines.

Negotiating power with suppliers By targeting the mass market, focusing on volume and product or service turnover, companies can work with extremely reduced margins and base their profit on the financial cycle, the difference between the value of cash receipts and payments to suppliers. In this respect, supplier management and achieving favourable payment concessions may constitute an important variable in a Low Cost company’s quest for profits. With high product turnover the Low Cost business can turn into a financing business (charge in cash and pay at 120 days).

Intensive communication policy The marketing mix of a Low Cost business model should give a great deal of importance to developing a communication policy that incentivises demand and generates brand notoriety. A range of communication initiatives can be implemented under a Low Cost concept using below-the-line actions (buzz marketing, publicity) and new technologies (Internet, emailings, SMS, blogs).

Costs structure optimisation There are basic aspects that a Low Cost business should consider as part of its costs structure: – Doing away with or minimising fixed costs – Reconverting fixed costs into variable costs – Doing away with certain variable costs such as intermediation costs – Cutting down on variable costs All this enables a company to reach breakeven point earlier, after which the business unit begins to make a profit. Ryanair manages to make a profit with a 55% occupancy level on its flights; other airline companies do so only above an occupancy level of 80%-85%.

Doing away with the middle man (disintermediation) Although this point is implicit in the costs structure, it is crucial to the Low Cost business model concept, one of the core features of which is to shorten the distribution chain by cutting out the middleman. This has been made possible thanks to the Internet and new technologies that provide an information platform that is in effect a point of sale.

Targeting markets or sectors that are price sensitive Elasticity of demand is a key factor for developing a Low Cost business and is essential to its development. It involves targeting markets where a positive demand elasticity curve shows that demand increases when potential customers are offered lower prices. This is the factor behind the increase in the number of new mobile phone operators (MPO), where even large distribution chains such as Carrefour have entered the game. The new operators base their strategy on an aggressive price reduction policy in comparison with dominant players such as Movistar and Vodafone.

The important thing is to innovate Innovating may end up being very profitable if we manage to identify a new product or service concept which enables us to identify a previously unrecognised need (Cybercafés, easyCinema). Being a pioneer may bring a company a competitive advantage offering it an exceptional positioning and differentiation as is the case of Skype with its software which enables people to make free phone calls via the Internet or Ilkone Mobile Telecommunications, which has designed a mobile phone for Muslims that features verses from the Koran in its memory and a compass to locate Mecca.

Consumers willing to “work” to get the best deal Low Cost consumers are usually willing to make certain sacrifices and take on certain costs that they perceive to be of less value (travelling to secondary airports or driving to the outskirts of the city to shop in hypermarkets, spending hours searching for the best travel deal on the web, transporting and assembling purchased items).

Low cost, high return: what makes a Low Cost business work? by Martín Vivancos

43 EFMD Global Focus | Volume 03 | Issue 03 2009

The Low Cost business model seems to have revolutionised, or at least reinterpreted, the way we conceive competition. It does away with some traditional conceptions such as the idea that low cost is synonymous with low quality and low value for the customer Customers with information power but without negotiating power The Low Cost business model is targeted at markets where customer familiarity with and use of new technology provides them with a high level of information. It even acknowledges customer’s power through word of mouth and their potential positive or negative influence on the business. Although the consumer’s power over the purchasing process is taken for granted here, this business model minimises the customer’s negotiating power to a large extent because it targets the final consumer with a self-limited purchasing power.

We now buy things taking for granted that they are not going to last for a lifetime. We purchase their expiry date, thinking about when we will need to replace them in the future. This brings on the need for an agile, creative and flexible business model in order to adapt a product’s structure, shape and contents to customer demands while optimising costs.

The Low Cost business model seems to have revolutionised, or at least reinterpreted, the way we conceive competition. It does away with some traditional conceptions such as the idea that low cost is synonymous with low quality and low value for the customer. It even obviates the fact that more A business which can potentially be exported to new geographical markets services or features are not synonymous with greater value for the customer With the Internet time and space disappear. In line with this point, new if they do not address the customer’s needs or if customers are not willing to technologies enable companies to “universalise” their business and capture pay for them. An in-depth knowledge of the market is therefore an essential customers immediately beyond the conventional scope of influence of a prerequisite for developing a Low Cost business model. shop or point of sale. Market globalisation and easy access to markets via Another important aspect of this business model is its close association the Internet enables companies to cater to a greater potential market that with the Internet and new technologies. It is crucial therefore to carefully was unthought-of until recently. define the internal management of the business and the interface for Linked to the Internet and/or to new technologie transactions with customers.

The Internet has emerged as a two-directional or multidirectional Having said this, Low Cost evidently requires significant investments, communication medium and at the same time constitutes an information especially in technology and market research. It is a way of competing search medium and a transaction channel. Among their multiple uses, new that has demonstrated that we can create value based on low cost and that technologies are polyvalent as information sources, a publicity medium value is not the exclusive prerogative of premium or high cost business and off-site shops. models. However, like all models, it is not devoid of risks and threats that need The Low Cost business model is based on the tenet that the potential to be taken seriously. customer is a well-informed consumer who invests time in order to In all likelihood, its greatest threat probably comes from the expansion of gather information about the product and its alternatives, which makes the Low Cost business model itself, encouraged by the current state of the him/her an expert purchaser of prices and services. economy, where price has become a key factor in the purchasing process.

Conclusions Perhaps this business model’s success may end up being its greatest threat The Low Cost model guarantees expenditure optimisation given that a in the future. product is likely to soon become obsolete, especially in the technology sector. Product durability is something that is no longer highly valued, ABOUT THE AUTHOR Martín Vivancos is Marketing Programmes Director at EADA business school, Barcelona, Spain. in fact quite the opposite. Today, things are speedily replaced.

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Leadership development: is it worth the money?

Yes, say Jennifer Martineau, Emily Hoole and Tracy Patterson of the Center for Creative Leadership. They explain how to evaluate the worth of leadership development

H

istorically, when budgets have tightened during an economic recession, training and development have been among the first corporate activities to see funding reduced.

But today we know more about the implications of failing to develop the people who are responsible for setting an organisation’s strategy, growing and retaining its talent, and carrying it through difficult times into the future.

Indeed, research shows that organisations that invest in human capital development (including leadership development) see a significant return in the form of stock prices.

To effectively manage and lead in times of crisis and complexity, these leaders need multiple types of development, including financial management, strategy, communication and indeed leadership development.

Why leadership development in addition to the more business-oriented capabilities? One could argue that many of the failures in the financial and real estate sectors in recent years are at least in part attributable to ineffective leadership: poor decision making, lack of accountability to customers and the public, and lapses in ethics. What would be different today if leadership development had been a priority for organisations in these fields?

Although there are many challenges to evaluating the impact of leadership development, the Center for Creative Leadership’s (CCL) research and experience with clients increasingly shows that development leads to multiple outcomes in terms of organisational success. Here we highlight four: financial performance, talent attraction and retention, development of a performance culture, and increased organisational agility.

Management development by Jennifer Martineau, Emily Hoole and Tracy Patterson

45 EFMD Global Focus | Volume 03 | Issue 03 2009

65% 65% of companies with mature succession management programmes were effective at driving improved business results through leadership skills versus 6% of companies with no succession process

One could argue that many of the failures in the financial and real estate sectors in recent years are at least in part attributable to ineffective leadership

Improved financial performance Formal leadership development programmes can increase leadership effectiveness, prevent derailment (that is, problems that stall a career) and increase the productivity, engagement and commitment of direct reports, leading to a stronger more profitable organisation.

A 2007 study in Harvard Business Review by Laurie Bassi and Daniel McMurrer showed a strong link between leadership skills and the bottom line. The study examined the stock prices of 11 publicly traded financial services firms. Companies with high scores for their investments in human capital delivered stock market returns that were five times higher than those of companies with less emphasis on human capital.

A recent study, “High Impact Succession Management� by CCL and Bersin and Associates, a learning and talent management research and

advisory group, found that development planning was a key differentiator between organisations with mature and effective succession management programmes and those without. And 65% of companies with mature succession management programmes were effective at driving improved business results through leadership skills versus 6% of companies with no succession process.

Attract and retain the best talent Other research by Bersin & Associates shows that providing leadership development for internal staff is more effective than hiring externally.

Why? Because internal candidates already know the organisation and how to navigate it. It is also often difficult and expensive to recruit outside leaders to fill key positions.

Financial group AXA Equitable saw strong leadership – the kind that

IMAGEs COURTESY: KONE

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wins the hearts and minds of employees – as the key to breakthrough performance. With CCL as its partner, it launched an ambitious initiative to help several hundred company executives lead through change.

Several years later, AXA executives had raised their performance against productivity goals, improved communication with employees and strengthened their leadership pipeline, positioning AXA for sustained success in a rapidly changing industry.

Law firms have long operated on the belief that being a good lawyer simply involves subject matter expertise and giving good advice.

Leadership is often a neglected part of the equation – and firms can lose direction and, even more significantly, their top talent as a result. Recent upheaval in the London “Magic Circle” of top law firms, covered extensively in the UK business media, could be evidence of this lack of attention to leadership and not just a consequence of the recession.

On the other hand, Baker & McKenzie, the world’s largest law firm, wanted to break that pattern. It partnered with CCL to build a strong leadership culture and to bolster efforts to recruit and retain associates.

Drive a performance culture According to Bersin & Associates, “leadership development is not just about developing leaders – it is about creating a culture of performance.

There is a relationship between good management and employee commitment. Great leaders attract, hire and inspire great people. A mediocre manager will never attract or retain high-performing employees. Leadership development creates a magnet for highperformers and fosters a high-performance organisation. This is why the organisations that are ‘built to last’ have strong histories of leadership development.”

KONE is a company with nearly 100 years of history in the elevator and escalator industry and its culture has evolved through many different acquisitions around the world.

“The industry has several major global companies that aggressively compete and KONE is working hard to become the industry leader,” says Vance Tang, KONE’s Executive Vice President, Americas. “Several years ago we began the challenging work with CCL to evolve from a very traditional command and control type of leadership culture to one of interdependent collaboration.

“Our executive leadership team in the Americas worked together to redesign the organisation structure ... and model a new way of working together. We also actively selected leaders for the new organisation that we felt had the important balance of technical capabilities for the role and the leadership traits that we wanted for our evolving culture.

“Although we know we have more work ahead, our early successes are very exciting. For example, while implementing a major organisational change, we improved our employee safety performance by over 50%, tripled our customer satisfaction levels and raised our employee engagement to world-class levels in just over two years. We also delivered strong profitable growth during one of the worst recessions in modern history.

“There is no question in my mind that these outstanding results are driven by the hard work and investments we have made in both developing our individual leaders and actively working to establish a strong, clear and differentiating leadership culture.”

Increase organisational agility When facing changes in the business environment, 86% of companies with strategic leadership development programmes are able to respond rapidly compared with just 52% of companies with less mature leadership programmes, according to Bersin & Associates.

A strong emphasis on leadership development played a key role in Textron’s transformation from a sprawling, decentralised corporation into a highly focused enterprise. The Fortune 500 company, whose

Management development by Jennifer Martineau, Emily Hoole and Tracy Patterson

47 EFMD Global Focus | Volume 03 | Issue 03 2009

There has probably never been a time in the world’s history when leadership development has been more critical to organisations

86% When facing changes in the business environment, 86% of companies with strategic leadership development programmes are able to respond rapidly compared with just 52% of companies with less mature leadership programmes brands include Cessna Aircraft and E-Z-GO golf carts, credits CCL for its enhanced ability to tackle change. Five years ago, the company promoted only 6% of its top 175 executives from within its businesses.

Today, that rate runs at 74%. When Bell Helicopter, one of the company’s nine businesses, won a big contract and needed more support, Textron moved executives among its own businesses with ease – creating a more nimble and productive company.

The role of evaluation In order to measure the impact of their investment in leadership development the most critical thing that organisations can do is to consider the intended outcomes and impact before beginning to develop leaders. By considering evaluation at the front end, those responsible for the programmes can ask questions that help programme designers and stakeholders to frame interventions in terms of goals, outcomes and objectives and reflect on how the programme anticipates outcomes.

“Evaluative thinking”, as CCL calls it, helps designers and stakeholders to consider their vision for a successful intervention. What does success look like? When will the desired outcomes be observable? What type(s) of data will be most convincing and appropriate for a programme’s stakeholders? What types of contextual factors exist that may support the programme in creating the desired change or prevent change from occurring as intended?

CCL’s evaluation practice, reflected in the practical guide Evaluating the Impact of Leadership Development and other publications, provides both a process and tools/methods to be used to successfully demonstrate the impact of leadership development in organisations.

It is most critical that organisations identify the outcomes they expect from leadership development and design both the programme and the evaluation to address these outcomes. As indicated above, outcomes will vary depending on the reasons organisations are using leadership

development as a strategic change tool. If an organisation wants to create a more performance-oriented culture, for example, the evaluation should measure various outcomes that indicate changes to the culture and the resulting performance outcomes.

There has probably never been a time in the world’s history when leadership development has been more critical to organisations. The pressures we have been experiencing related to technology, innovation, globalisation and talent wars have been exacerbated by the state of the economic environment. Organisations with effective leadership will be the ones to survive and thrive in the coming decade.

Knowing that leadership development is producing effective leadership and positively impacts the organisation requires strong evaluation practices that measure relevant results. Evaluation must move beyond the theoretical and be used strategically to enable organisations to accomplish their significant goals. Only then will the real contribution of leadership development be known.

ABOUT THE AUTHORS

Jennifer Martineau, Emily Hoole and Tracy Patterson are respectively, Group Director, Global Research, Innovation, and Evaluation, Director, Evaluation Center, and Faculty, Evaluation Center, at the Center for Creative Leadership and can be reached at: Jennifer Martineau – martineauj@ccl.org Emily Hoole – hoolee@ccl.org Tracy Patterson –pattersont@ccl.org. www.ccl.org

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The global economic crisis has created new challenges for management development and business education but also new opportunities.

Christopher Jahns, Rolf Tilmes and Ulrich Winkler look at how suppliers are responding

Trends and challenges in corporate learning programmes

49 EFMD Global Focus | Volume 03 | Issue 03 2009

Supply and demand by Christopher Jahns, Rolf Tilmes and Ulrich Winkler

W

hile the mass media is preoccupied with the global economic crisis, business companies and organisations across the world are concentrating on coming to grips with it.

They are implementing both surprising and radical changes to corporate learning and personal development programmes. These changes bring with them challenges and opportunities alike for business schools.

This article takes a look at some of the most recent developments and challenges in executive education (in-house programmes), MBA/Executive MBA and certificate programmes (openenrolment programmes).

Executive education: corporate universities The economic crisis is not the only motor driving changes to in-house learning programmes, a fact underpinned first and foremost by the rapidly increasing number of corporate procurement universities and supply chain universities.

Even before the financial crisis loomed, business organisations had discovered the growing importance of purchasing, logistics, supply management and supply chain management. And also the lack of in-house programmes that, to date, deal not only with operational responsibilities (conducting negotiations, process management and so on) but also with strategic management tasks (for example supply chain risk management and category management).

Even before the financial crisis loomed, business organisations had discovered the growing importance of purchasing, logistics, supply management and supply chain management

Corporate universities offer a means to close this competence gap. The design and development of programmes and the choice of instructors represent a challenge for business schools, albeit a rewarding challenge that several have already taken up.

Companies such as Airbus, Swisscom and NestlĂŠ have recently established corporate procurement or supply chain management universities.

Distance learning is replacing e-learning Though e-learning has “flunked� as a buzz word in a number of corporate areas, distance learning is rapidly becoming pervasive. Broadly speaking, it takes advantage of numerous familiar Internet tools that are now being used in corporate education: podcasts, webcasts, forums, chat rooms and so on.

In our experience, however, the distance learning platform will only gain wide acceptance when its educational marketing is state-of-the-art. For example, the US Postal Services has set up a supply chain university that is entirely Internet-based. Its

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up-front advertising campaign, in terms of both reach and audience, leans heavily on blockbuster advertising for Hollywood films (“Coming soon to a PC near you: Supply Chain Academy!”).

Coaching Specialist and executive coaching has been on the market for more than 30 years and today it is a booming industry. The newest addition to the product family is self-coaching. Here the crisis connection is relatively clear: the greater the pressure on management, the sooner managers clamours for a coach on the sidelines. Meanwhile, the needs for coaching are so diverse that managers also wish to be coached when the coach is not even available. This has led to numerous human resource managers identifying self-coaching as a future skill and incorporating it into their curricula.

MBA and EMBA In times of crises, there is a noticeable trend in America towards an increased demand for MBA programmes, with participants using the economic downturn to sharpen their professional profile.

25 Recently, the number of MBA programmes on the German market increased by a factor of 25 to include roughly 250 MBA programmes of all sorts of shapes and sizes been considering these and similar questions for quite a long time and as a result have enhanced our programmes to include aspects relating to business ethics and philosophy.

In other markets, such as Germany, we have a different situation. Here, the MBA is still a long way from being as well-established as in America.

Moreover, the market is fragmented and oversaturated. Recently, the number of MBA programmes on the market increased by a factor of 25 to include roughly 250 MBA programmes of all sorts of shapes and sizes. Presumably, many of these will not have the staying power for long-term survival in times of crisis.

Multipolar global structure Regardless of the direction the crisis is heading in, there is one development that business schools will have to brace themselves for: American dominance will decrease and China and India will become the new global hubs of economic development and networks.

and quality of MBA programmes had repeatedly been called into question long before this.

Adjustment It goes without saying that a course with a core focus on Financial Economics must, today, be vastly different to the course offered 15 months ago. This development is not just a consequence of the world economic crisis.

Programmes aimed particularly at professionals in active employment have to undergo permanent appraisal and adaptation to ensure they meet current requirements: lack of actuality results in lack of acquisition.

In these circumstances, business schools are faced with the task of preparing their students to assume future responsibility in a multipolar world and equip The use of distance learning technologies in MBA and EMBA programmes them with the requisite intercultural competencies and communication should not be underestimated. Market potential does exist and the benefits skills. Against the backdrop of the economic crisis, the ability to communicate for pedagogy, knowledge transfer and sustained learning cannot be denied. has advanced to the number-one recruitment requirement sought by companies. Business schools that have always placed a strong emphasis on Distance learning can reinforce and sustain the learning process and offer greater flexibility. It can open up radically new opportunities for networking personal development are at a definite advantage. between participants and for interaction between professors and students. Certificate programmes Business schools should grasp and make use of this opportunity though European Business School currently offers a total of 28 open-enrolment at the same time not lose sight of the fact that face-to-face team building certificate programmes. These include, for example, the contact study programme Real Estate Investment & Finance leading to the qualification and group dynamics should not be neglected.

The media today frequently claim that graduates from MBA programmes Real Estate Economist (EBS) and Financial Economics leading to the especially have brought the economic crisis upon us. However, the purpose qualification Financial Economist (EBS).

The discussion, though not new, is therefore justified. In fact, business schools have to face the question as to whether the education they provide to their graduates takes sufficient account of the ethical dimension.

At European Business School we have

Strength in innovation If we develop this programme appraisal further, we ultimately arrive at programme innovation. In 2004, for example, with the first signs of the hedge funds boom on the horizon, we incorporated the topic area “Alternative Investments” in our programme portfolio. The challenge lies in the continuous development of new programmes that take over when individual product life cycles come to an end.

Flexibility There is also a growing trend toward shorter programmes.

In contrast to earlier years, it is difficult today to sell a product lasting 50 days. Demand currently peaks between seven and 20 days. Accompanying this trend is an increasing demand for flexibility. We assure participants in our programmes

51 EFMD Global Focus | Volume 03 | Issue 03 2009

Supply and demand by Christopher Jahns, Rolf Tilmes and Ulrich Winkler

There is a growing trend toward shorter programmes. In contrast to earlier years, it is difficult today to sell a product lasting 50 days. Demand currently peaks between seven and 20 days

that they can “see it through” in one year – but thanks to the modular structure they are also able to spread the programme over several years. Participants’ fragmented lifestyles simply demand this increased flexibility.

Brand Management “Business Administration for Engineers” would undoubtedly find buyers.

However, not to put too fine a point upon it, such a programme is too broadly based and too general to allow effective marketing and to be successful in the long term.

22%

Those aiming for sustained success must be able to demonstrate a distinct “specialist for...” profile and build so-called beacons. At EBS these beacons include, for example, finance and supply chain management.

Within two years of finishing their studies the salaries of EBS graduates increase by an average of 22%

In a number of our programmes 50% of the participants pay the tuition fees out of their own pocket. If we were content with delivering run-ofthe-mill knowledge and skills, our appraisal sheets would soon include complaints such as: “This day was not worth the €1,000 I paid for it!” In fact, within two years of finishing their studies the salaries of our graduates increase by an average of 22%. This is a fact and at the same time a promise.

A successful brand must make this promise – and keep it. And the only way to achieve this is with rigorous quality and brand management.

The current crisis and the criticism directed against business schools might represent new phenomena but ultimately they merely serve in accelerating a process that has long been under way: increased pressure towards delivering tailor-made programmes and accompanying services.

Interlocking The majority of companies have yet to acknowledge the potential of open-enrolment certificate programmes. They neither use them as an instrument for personal development nor as an incentive instrument – although many human resource managers frequently complain about high staff fluctuation. The development of this market potential is a major communication and acquisition challenge facing business schools.

The acquisition approach in future will need to be as targeted and flexible as possible; programme offerings and curricula will have to take specific client and target group requirements into consideration. Even the cry for educational programmes with a greater focus on ethnic issues is in this sense not new but simply the expression of yet another target group’s needs.

It’s comforting to know that at the end of the day it all boils down to basic market theory: supply that meets demand will always define success.

Conclusion There is little to be gained from playing down the current crisis, the repeated criticism of business schools and their (co) responsibility for the situation. However, there is just as little sense in overestimating these two factors, a trend that can be clearly observed in parts of the market.

ABOUT THE AUTHORS

Christopher Jahns, Rolf Tilmes and Ulrich Winkler are respectively President, Dean and Executive Vice Dean Education at the European Business School, Germany

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Allyson Stewart-Allen and Dr Michael Christ explain how a successful partnership between Lufthansa School of Business and London Business School delivered the General Management Programme

53 EFMD Global Focus | Volume 03 | Issue 03 2009

Partnership at its best by Allyson Stewart and Dr Michael Christ

Partnership at its best Partnership between business and business schools can only happen between involved and responsible people

T

he Lufthansa School of Business (LHSB) was founded in 1998 as the first Corporate University in Germany.

Its mission is to provide advanced management training and development for the Lufthansa Group managers according to their requirements and in line with Lufthansa’s strategy.

Across company borders LHSB is offering management programmes as well as platforms for dialogue, networking and information and therefore helps managers to enlarge their personal network and contributes to building a corporate leadership culture.

The strategic partnership between Lufthansa and three internationally renowned business schools –esmt in Germany and Ashridge and London Business School (LBS) in the UK – has existed for more than six years and has helped LHSB to design, offer and refine many successful programmes during this time.

The General Management Programme (GMP), a joint programme between LHSB and LBS, is a good example of this relationship model. Both partners believe this strategic partnership means more than the collaboration of two organisations. True partnership requires sustainability, trust, engagement, shared responsibility, continuous communication and “being involved”.

In the end, partnership between business and business schools can only happen between involved and responsible people.

The joint GMP development process of LHSB and LBS from the very beginning to its first realisation in 2005 is proof how true partnership results in doing successful things together.

“True partnership needs common goals and shared objectives, which lead to an aligned approach”

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Alignment to the corporate strategy “In the beginning every journey starts with the desire to travel together.”

Common goals and shared objectives are therefore essential. This was true of LHSB and LBS, who shared the vision of developing an innovative executive programme to tackle the development needs of senior managers with above-average performance and potential.

To achieve those objectives LHSB and LBS use an aligned approach for choosing, preparing and organising appropriate design elements and thus avoid “lost orientation” as well as randomness of content.

The design and delivery of the programme and its priorities are driven by the Strategic Development Process for Corporate Executive Development and LHSB products, who’s main objective is to connect individual management development and corporate organisational development in a bottom-up and top-down process.

In giving the corporate strategy tangible relevance for Human Resource Development (HRD) and for the creation of HR tools, programmes and projects, LH has found the “Holy Grail” of corporate executive development.

In the first bottom-up stage of this process, participants from all business partners within the LH Group – HR Development, corporate strategy, main strategic projects and representatives from the Board offices – are involved in structured interviews and workshops facilitated by the central HRD department.

IMAGE COURTESY: ASHRIDGE

The overall objectives of the GMP are to enhance general management skills, to develop entrepreneurial potential, to get outside perspectives that can be applied to the business units of the participants and to enlarge their personal networks.

True partnership is not just about theory, approaches and concepts but also about “walking the talk”

These interviews and workshops enable HRD to collect and prioritise the main future requirements for management development in the LH Group.

To gain a vital external perspective on trends in the field of learning and development, LHSB ensures that its preferred business school partners are involved from the outset.

LBS was asked like the others to give its view on future HRD trends in a forward-looking approach. The compiled results of these structured interviews and workshops are the so-called “Strategic Fields of Action”, which are in the second, top-down, stage of the Strategic Development Process, prioritised and amended by the Board of LH’s major business units via an online questionnaire.

The whole process creates a reliable basis to guide and to design management development products and programmes. Each design element within the GMP is derived from the Strategic Fields of Action and therefore assures the alignment of the GMP to the corporate strategy, external trends and the individual needs of the executives.

This demonstrates efficiency and effectiveness by focusing instantly on the “right things” such as the nomination of the “right” participants, the design of the “right” module themes and the creation of the “right” learning environment. This shows that true partnership is not just about theory, approaches and concepts but also about “walking the talk”.

The right participants The participants of the GMP are top managers from across the LH Group, located around the world. As the participants usually act within an aviation ecosystem, managers from LH “system partners” (for example Frankfurt Airport, German Air Traffic Control and Munich Airport) are also invited to join the programme.

IMAGE COURTESY: LONDON BUSINESS SCHOOL

The nomination process includes the corporate HR development department, which provides the grading results that show the performance and potential of each participant. Furthermore, each individual candidate is nominated by the Board of the respective business unit. These carefully selected top managers receive an invitation, which is personally given to the nominee by one of his or her Board members. This demonstrates that participating on the GMP is one form of recognition of their value to the company.

“True partnership is about shared responsibility and changing the lead” The right module themes LBS “takes over the lead” while creating the concrete content of the structure of the programme. The partnership concept is thereby still maintained by the fact that each of these design steps are reviewed in detail and updated in consultation with LHSB. The GMP is a three-module programme, each module consisting of four days plus an evening prior to the official start. The modules are three to four months apart, making the whole programme last approximately eight months.

The three programme module themes are “strategic thinking and current

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Partnership at its best by Allyson Stewart and Dr Michael Christ

6 years

participants and Board members. That underlines the aspect that, next to the content of the modules, networking activities are seen as an essential part of the programme.

The right learning environment To develop a creative learning environment the GMP takes place at three different international locations (London, Mumbai and Seeheim) and is therefore conducted in English.

The strategic partnership between Lufthansa and esmt in Germany and Ashridge and London Business School (LBS) in the UK Another design element is the implementation of peer-coaching groups, has existed for more than six years each with a series of inter-modular discussion and simulation exercises, bringing each module’s subject matter to life behaviourally in participants’ daily work.

It also helps to build bridges between the modules, keeps participants active and supports them in deepening their relationship. Field visits during the GMP – including for example tours of partners’ organisation as well as visits to an urban community development project in the biggest slum in Mumbai – are also deliberate parts of the design of the programme to help deepen the understanding among all participants of the challenges and co-dependencies across their organisations.

“True partnership means sharing sustainable success with each other”

Assessing the business impact At the end of the third module of the programme, partnership also requires sharing sustainable success with each other.

A thorough programme evaluation of the impact of the GMP and its benefits for current and future participants is measured at two different levels.

First, after each GMP module participants receive an evaluation questionnaire developed jointly by LHSB and LBS. On top of the written evaluation an overall oral evaluation about all three modules is done with the group. Here participants are asked for their view of the most valuable aspects of the GMP, key elements they would retain intact and things they would modify or add.

The second level of the impact assessment is conducted four to six months after the last of the three GMP modules.

trends”, “business transformation”, and “value creation and leadership”.

An online “company impact assessment” questionnaire measures the perceived residual impact of the GMP on the performance and behaviour of the participants according to the competency model of Lufthansa (the Aviation Leadership Compass).

Both tools – the oral and written module evaluations and the impact assessment – allow the GMP Programme Director and Project Manager to continually improve the programme from cycle to cycle. In order to further The strategy module examines the context in which Lufthansa competes ensure consistency and quality assurance of the programme these individuals and explores how companies choose to compete and derive long-term also attend each GMP module, making last-minute fine adjustments, results from their markets. answering queries from participants, faculties and other outside contributors.

The transformation module explores how organisations must focus on their LHSB and LBS form a strong team whose member are constantly focused chosen markets in the light of their strategies and transform themselves on delivering sustainable impact on the company. Significant evaluation in order to exploit their strategic opportunities. Here the participants and performance outcomes have been achieved, so that the programme discover in what different ways organisations have to change in order to is now planned to be held for the fourth time in four years. realise strategies and exploit the opportunities they either create or confront.

Each part of this deliberate sequence of modules is carefully designed to serve a particular purpose.

The leadership module explores how Lufthansa effects transformation through its people or how they help the organisation implement its corporate strategy by doing things differently.

Key to the success of the GMP is the enthusiastic support demonstrated by the Lufthansa Executive Board. Each Executive Board Member joins one GMP module as a keynote speaker and fosters the dialogue between

FURTHER INFORMATION

This article is an edited version of the winning entry in the EFMD Excellence in Practice Award 2009.

ABOUT THE AUTHORS

Allyson Stewart-Allen is Programme Director, Centre for Management Development, London Business School, and Dr Michael Christ is Head of Corporate Executive Development and Lufthansa School of Business More information on the 2010 EFMD Excellence In Practice Award can be found at: www.efmd.org/eip

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EFMD 2009 | www.efmd.org/conferences

Upcoming events November 2009

December 2009

January 2010

February 2010

Joint EFMD-EURAM Programme Dates / Venue 5-6 November / Brussels, Belgium 1st of 3 modules Theme Creating Research Leadership in Europe Host EFMD

International Deans’ Programme (IDP) Dates / Venue 8-9 December / Brussels, London, UK 1st of 3 modules Theme Creating Research Leadership in Europe Host Judge Business School & Cranfield School of Management

Meeting for Deans & Directors General Dates / Venue 28-29 January / Vienna, Austria Theme What Deans are interested in‌ Host Vienna Unversity of Economics and Business

EFMD Entrepreneurship Conference Dates / Venue 21-22-23 February / Paris, France Theme Entrepreneurs as Agents of Creativity in Times of Crisis Host Advancia

EFMD Advisory Seminar Dates / Venue 17 November / Brussels, Belgium Theme Opportunities for Business Education in Africa Host EFMD 1st Global Drucker Forum Dates / Venue 19-20 November / Vienna, Austria Theme Managing for the Future Host Drucker Society of Austria EFMD EQUIS Accreditation Seminar Dates / Venue 24 November / Brussels, Belgium Theme Interpretation and practical application of EQUIS Standards and Criteria Host EFMD

Joint EFMD-EURAM Programme Dates / Venue 10-11 December / Brussels, Belgium 2nd of 3 modules Theme Creating Research Leadership in Europe Host EFMD

International Teachers Program Hosted by the Kellogg School of Management Program begins January 2010 The International Teachers Program is an intensive faculty-development program dedicated to helping business educators develop suitable skills and capabilities to be successful in their careers. The program benefits from the participation of a diverse group of top-notch teachers and professionals from around the world who not only have a passion for teaching business topics but also a passion for teaching how to teach. The program begins in January 2010 with the residential module scheduled for July 4–11, 2010 at Northwestern University’s Kellogg School of Management in Evanston, Illinois. For more information and to apply online please visit

www.kellogg.northwestern.edu/ITP or call 1-847-467-7000.

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How do you find the world’s best students?

Into the mainstream Koç Business School’s Baris Tan is bringing management education in Turkey into the European mainstream

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INSIDE THIS ISSUE

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Schools for scandal Gerard van Schaik says business schools could save business from itself

History boys It’s not bunk and it has plenty of lessons for management says Morgen Witzel

Global leaders Andrew Rutsch on how business can find and develop the leaders it needs

Degree of doubt Degree and nondegree management education don’t mix says Ulrich Hommel

Creative tension Patrick Harris explains how to be creative in the workplace

Cheap and cheerful Martín Vivancos on why low-cost businesses work so well