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The Continuing Search for External Funding of Business Schools: A Next Generation Approach to Executive Education Center for Executive Education (CEE) Statistical Profile • • • • • • • Industry-funded start-up in 1972 Cumulative billings of >$100 million Worked with over 500 companies Involved over 25,000 participants & more than 200 faculty Catalog of 25-30 programs Full-time staff of 25 with over 50 PhD faculty Projected annual revenues of $7.5 million 2 Three Views of CEE’s Domain 1. Niche strategy • A boutique R&D outfit, more interested in the quality of work than in the quantity of work • Focused on being the thought leaders who develop next-generation solutions in carefully targeted domains 2. Core competence Interdisciplinary innovation in designing and delivering solutions-oriented programs using our High-Compression LearningSM methods 3. Organization All College of Business programs for working managers and executives Degree Programs: specialized MBAs Non-Degree Programs: short courses on Total Operations Excellence (TOPEX) 3 What Sets Us Apart? • • • • • • • • University vs. consulting company Strong customer focus Applied solutions orientation Interdisciplinary collaboration and integration Research AND development organization Clear TOPEX focus High-Compression LearningSM methods ROI mentality and strong value propositions 4 Specialized Executive MBAs • AMBA — Aerospace MBA, national program covering aerospace value stream (1 yr) • PEMBA — Physician Executive MBA, global program for MD business training (1 yr) • ProMBA — Professional MBA, regional weekend program for professionals accelerating their careers (16 mos) • SEMBA — Senior Executive MBA, national/global program for proven managers transitioning to general mgt/executive levels (1 yr) 5 TOPEX Non-Degree Programs LEAN ENTERPRISE CHANGE MANAGEMENT SIX SIGMA SUPPLY CHAIN 6 An Experience Base Both Broad and Deep Aerospace and Defense Motor Vehicles & Parts Chemicals Packaging & Containers Computers & Semiconductors Pharmaceuticals & Medical Electronics Precision Equipment Food & Beverages Printing & Publishing Forest & Paper Products Retailers & Wholesalers Government Transportation Household & Personal Products Utilities/Telecommunications Industrial & Farm Equipment Others 7 Center for Executive Education AEROSPACE & DEFENSE Boeing General Dynamics Goodrich Honeywell Intl. Lockheed Martin Northrop Grumman Raytheon Rockwell Collins Textron United Technologies CHEMICALS Air Products & Chemical Ashland Bayer Corporation Dow Chemical Dupont Eastman Chemical Engelhard PPG Industries Rohm & Haas COMPUTERS & SEMICONDUCTORS Applied Materials Dell Computer Hewlett-Packard Int. Business Machines Intel National Semiconductor NCR Pitney Bowes Sanmina-SCI Sun Microsystems Texas Instruments Xerox Honor Roll ELECTRONICS FOREST & PAPER Eaton Emerson Electric General Electric Maytag Philips Electronics N.A. Rockwell Automation Siemens Corporation SPX Tyco International Whirlpool Boise Cascade Bowater Georgia-Pacific International Paper Louisiana-Pacific MeadWestvaco Potlatch Weyerhaeuser FOOD & BEVERAGES Adolph Coors Anheuser-Bush Brown-Forman Campbell Soup Chiquita Brands Inc. Coca-Cola Coca-Cola Enterprises ConAgra Foods General Mills Gold Kist H. J. Heinz Kellogg Nestle USA Pepsi Americas Pepsi Bottling PepsiCo Pilgrim’s Pride Sara Lee Tyson Foods Unilever U.S. GOVERNMENT Army Corps of Engineers Canadian Postal Service Defense Logistics Agency Internal Revenue Service Oak Ridge National Labs Tennessee Valley Authority U.S. Air force U.S. Army U.S. Dept. of Interior U.S. Navy U.S. Postal Service HOUSEHOLD & PERSONAL Avon Products Clorox Colgate-Palmolive Dial Kimberly-Clark Procter & Gamble Stanley Works INDUSTRIAL & FARM Caterpillar Cummins Deere Dover Ingersoll-Rand ITT Industries Parker Hannifin MOTOR VEHICLE & PARTS Daimler Chrysler Delphi Federal-Mogul Ford Motor General Motors Goodyear Tire & Rubber Harley Davidson Johnson Controls Navistar International TRW Visteon PACKAGING, CONTAINERS Ball Bemis Crown Holdings Silgan Holdings Smurfit-Stone Container Sonoco Products Temple-Inland PHARMACEUTIC ALS & MEDICAL Abbott Laboratories Amgen Bausch & Lomb Becton Dickinson Bristol-Myers Squibb Eli Lilly Johnson & Johnson Medtronic Merck Pfizer Schering-Plough Wyeth PRECISION EQUIPMT 3M Danaher Eastman Kodak PerkinElmer Tektronix Thermo Electron PRINTING & PUBLISHING McGraw-Hill R.R. Donnelley & Sons Standard Register RETAILERS & WHOLESALERS Anixter International Best Buy Circuit City Stores Graybar United Stationers TRANSPORTATION Burlington Santa Fe Consolidated Freightways CSX Delta Air Lines FedEX J. B. Hunt Transport Norfolk Southern Roadway Ryder System Union Pacific United Parcel Service Yellow Freight UTILITIES & TELECOMMUNICATION AT&T Bell South Entergy Southern Co. Difficulties • Marketplace is more competitive than ever • More schools placing more emphasis on external sources of funding • Greater overlap with consulting organizations • Stronger company in-sourcing options • Unsophisticated buyers and sophisticated buyers • Greater upfront investment required to reach acceptable quality levels • Increasingly complicated problems to be addressed by customers 9 A Case Study: Aerospace-Defense Transformation • Strategically focused on A-D starting in 2002 • AMBA degree program and Lean MRO nondegree programs were first efforts • Soon became aware of national scope of issues to be addressed and inadequacy of our traditional approach • Let’s review the ideas we’re discussing with DOD/A-D and discuss implications, problems, opportunities, etc. 10 DOD/A-D Requirements • Increased availability & readiness • Greater agility & ability to rapidly adapt • Reduced Total Ownership Costs – Acquisition (28% of TOC) – Operations Cost (12% of TOC) – Logistics Support Costs (60% of TOC) Simultaneously delivering on all three requires a transformation of the defense enterprise spanning the total life cycle of systems management 11 We Already Know More Than We Are Doing • Distribution Process Owner • Total Asset Visibility – RFID – UIC • Supply Chain Management • Six Sigma, Theory of Constraints, ISO 9000 Certification, Lean Production/MRO, Total Quality Management/Leadership • Performance Based Contracting/Logistics • Contractor Logistics Support • Public/Private Partnering • ERP, GCSS-Army, GCSS-MC • Net-Centric Logistics We don’t need another process improvement program! 12 Basic Premises 1. Current training and educational model is not adequate as a change driver 2. We need a new national model For tackling national issues National educational/development priorities are not well served by the current “cottage industry” approach to education 13 Courses of Action • COA # 1 - Each Facility/Contractor Continues Independent Effort • COA # 2 - Each Service Consolidates Efforts • COA # 3 – OSD/J-4/Services Consolidate Efforts • COA # 4 – Establish a Commercial/Military (COMIL) National Center for Aerospace and Defense Transformation (ADTRAN) to support COA 1-3 14 COA # 4 National Center for Aerospace and Defense Transformation • Engage defense acquisition university to ensure standardized approaches across OEMs and DOD • Commercial sector participation a key element • Partner with academic institution with recognized expertise in essential areas 15 A Snap-Shot of the Desired “To Be” End State DOD University Corporate DOD Sponsor Sponsor National Clearinghouse National Local University College Corporate University 16 Shortcomings of the “As Is” Educational Model 1. 2. 3. 4. Too much education and training is not customer focused. We too often lack reliable mechanisms for incorporating the voice of the customer into curriculum design. We have no mechanism to help the isolated players work together to solve big problems of national importance. We lack the ability to effectively transfer best practices between military and commercial organizations. We are busy needlessly duplicating 101 “survey” courses while ignoring critically important “upper division” programs and courses beyond most obvious needs. This is a systems-level problem that we are trying to manage in a piecemeal fashion. 17 Shortcomings of the “As Is” Educational Model (cont’d) 6. 7. 8. 9. 10. Though we are duplicating efforts, uncoordinated educational efforts are still contributing to the Tower of Babble problem. We are failing to adequately absorb the tremendous up-front costs associated with quality program development. We are grossly underutilizing technology. Educational and developmental resources are not available where and when we need them at the local college / school level. We are losing tribal knowledge faster than it is being replaced. 18 Developing a National Curriculum Requires a National Network DOD University Corporate DOD Sponsor Sponsor National Clearinghouse National Local University College Corporate University 19 There are Ample Successful Precedents of Clearinghouses,… • • • • National Science Foundation Lean Aerospace Initiative Center for Innovation Management Studies Hundreds of smaller scale “forums” …but virtually all focus on research. 20 A Pilot Test of the National Curriculum Concept 1. 2. 3. Select a medium-sized, integrative topic Work across segments of DOD/A-D sector Work with partner schools in each of four categories: A. B. C. D. 4. 5. 6. Large Universities Corporate Universities DOD Universities Smaller Schools and Colleges Build in several funding gates to limit risk Use small rapid experiments to gain experience and work out bugs Grow only as success warrants 21 Funding Strategy • Use Experts from across DOD/A-D To Advise And Promote • Seed money for start up from University of Tennessee • Partnerships with leading military, corporate, and public universities • Funding through OSD and AIA and NDIA membership 22 Discussion Questions • What are the greatest obstacles to making the idea work? • Who has the weakest WIIFM? • What are the greatest risks? • What precedent and experience base is there to draw upon? • Who else might be interested in “joining up”? 23 The Continuing Search for External Funding of Business Schools: A Next Generation Approach to Executive Education