Trends in the B-school environment.

The remarkable progress of the Vlerick Leuven Gent Management School over the last few years sometimes makes us forget how tough the B- schools environment has become  for all but a handful of top schools, and even the latter  are facing serious adjustments.

Worldwide schools are increasingly struggling between the academic nature of their research mission  and faculty demographics on the one hand, and the increasing relevance and value for money demanded by corporate and individual customers.  A number of recent reports indicate a new level of soul searching in American Business Schools and their acknowledgment that the more diverse and often University-independent population of European B-Schools may be ahead of the curve in terms of innovation and adaptation to the new environment [1].

In the meantime the economic pressures and the demands of accreditation have led to an increasing bifurcation also among European B-Schools between those re-integrating the University departments, and those resolutely seeking autonomous survival based on own research, faculty and financial strength. The former try to play it both ways, being part of the University in terms of including faculty research in the B school rankings, and performing their non-degree (and even degree)  B school activities largely with external faculty. Their Achilles heel is the non-involvement and sometimes non-respect of the core faculty in the hand that feeds them. The latter group of Schools , among which Vlerick, tries to develop a consistent B-School culture, bridging between academic research, research for business and teaching. Their challenge is faculty development because of the ambidextrous demands on their faculty. Easing the pressure requires slack which only reputation and pricing power can bring.

Schools are competing in two markets: the educational  market where they compete for both individual and corporate customers,  and the academic market where they compete for junior and seasoned faculty.

In the educational market one can distinguish between degree programmes and non degree programmes. In  degree programmes especially , the market is more and more determined by reputation , and reputation is more and more rankings sensitive. Legitimate questioning of some of the relevance of the rankings with respect to the emerging needs does not diminish their use as a shorthand for quality by prospective students and corporations alike.

The  MBA market is mature in the US and Europe, but growing in the emerging economies. More importantly  the market has increasingly winner take all characteristics. Lower ranking schools  in both the US and Europe saw their enrolment and applications of fulltime MBA’s fall significantly. In the US the number of FT MBA’s dropped from 5527 in 2000 to 4642 in 2008. In Europe 4 of the top 15 schools and 12 of the next 15 schools saw a significant drop in enrolment[2]. Competition for good students is intense on scholarships and loans in the short term, and placement power in the long term.  In this context our doubling of the Vlerick MBA applications and admissions over the last two years is all the more remarkable.

At the same time part-time and executive MBA enrolment grew significantly  (from 41%to 67% of the total of MBA enrolment in the US). This growth was largely facilitated by the sponsoring by employers which has however recently reduced since the economic crisis.

In executive education open programmes are mature if not in regression. Both long programmes general management programmes and   especially shorter functional  ones undergo cost cutting pressure and a  trend toward selectivity. Brand is a key requirement for internationalizing open programmes. Besides brand  and  the reputation of faculty, it is  the level and quality of participants which attracts other participants,- a chicken and egg challenge for schools to break into that market.

The market move toward CSP’s is undeniable. Here the barriers to internationalization relate more to demonstrated professionalism, client focus , international faculty resources and delivery, though brand strongly determines pricing power (by a factor of one to three). Corporations do not seem to value ‘academic research’ as evidenced in their equal respect for the applied research of more business focused organizations (IMD, Duke Exec Ed, Fondacao Dom Cabral, and CCL). More important is the ability to create end to end solutions and architectures, and to field a faculty team that understands the client’s issues and has great teaching, workshop and coaching skills  Upgrading the size, capability, ambidexterity  and international composition of our faculty is the number one priority of  Schools that want to thrive in this new environment.

Ultimately Schools are in a supply driven business: competitiveness in these customer markets depends on the supply of the right faculty. Not only is the market for Ph.D.  students in Management thin, most doctorates are also geared almost exclusively to preparing students for a journal research in their functional domain of expertise. Resource  schools compete for the top graduates based on very limited teaching loads and guaranteed research funding.

At the same time those same young faculty often find the classroom, where they are faced with smart students with business experience and who paid high tuition fees , extremely challenging. No matter how light their teaching load, the teaching pressure often weighs on their research output. Faculty development , to bridge the gap between the initial training of faculty and the expectations of students and companies has always been the most challenging process for Schools, taking several years even for successful individuals.

Given the changing programme environment which we described earlier with its demands for relevance, cross functional approaches and applicability of the teaching, many schools have increasingly subcontracted most of the seasoned teaching to a new category of Adjunct Faculty and Professors of Practice , abandoning the effort to make their career faculty become ambidextrous and adjust to the reality of the business education. Ironically, whilst depending on such faculty for a large part of their teaching and income, the same adjunct faculty are often considered as second class citizen’s in those Schools.

At Vlerick we are conscious of trying to follow a more difficult, but satisfying path. Our Assistant Professors are early on in their career exposed to business reality through supervision of student projects and through Research for Business activities which represent over 20% of our budget. As an Academic Business School we too expect our faculty to make their mark with A journals, but are committed to privilege quality over quantity, and to factor in relevance and cross functional contributions in the evaluation. To speed up their development we have initiated an array of pedagogical development initiatives. We too are complementing the career faculty with a number of Adjunct Professors and Professors of Practice, but are committed to value them equally , both financially and in terms of  what we call “partnership” potential, our equivalent for tenure. In the past two years we have recruited or internally promoted 16 career and adjunct  faculty, for a net gain of 11. We now have 44 core faculty up from 33 in 2008. In the process our faculty internationalization ratio has evolved from 27% (9 nationalities) to 32% (13 nationalities). Recruiting, developing and retaining great faculty remains our most challenging  task if we are to serve our student and company customers.

[1]  See amongst others : Shrikant Datar, David Garvin and Patrick Cullen,  Rethinking the MBA (Harvard Business Press, Boston MA, 2010).and

 Rakesh Khurana, From higher aims to hired hands (Princeton University Press, Princeton N.J.2007)

[2] Statistics from  Shrikant Datar, David Garvin and Patrick Cullen,  Rethinking the MBA (Harvard Business Press, Boston MA, 2010) Chapter 2.

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