The ‘barbarians at the gates of the business school’

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You won’t find any books, exams or lectures at the THNK School of Creative Leadership, in Amsterdam, one of many alternative providers of executive education that take business schools at their own game. In a break with traditional approaches, his courses are experiential, engaging participants in hands-on experiences, such as role-playing business scenarios, and reflections that take them out of their comfort zones.

“Our teachers are not the ‘sage on stage’, but the ‘guide on the side,’” says Mark Vernooij, a THNK partner. This method is not only fun, he suggests, but it also helps facilitate lasting changes in mindset and behavior.

THNK claims that its “creative leadership” model can help meet the needs of society at large, while its training courses are aligned with the UN Sustainable Development Goals. “We believe that leadership development can be a great lever for positive change in the world,” says Vernooij.

Business schools face fierce competition from these new entrants in executive education, a major source of revenue. The global corporate training market was valued at more than $345 billion in 2021, and is projected to reach $493 billion by 2028, according to consulting firm SkyQuest’s Corporate Training Market Survey.

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“The market is heating up and the overall market is growing significantly, but so are the competition and new players,” says Tristan Hockley, education sector leader in PwC’s consulting business in Southeast Asia.

Beyond academic institutions, consulting firms like McKinsey & Company and Egon Zehnder are driving executive education forward. There are also online platforms like edX, Coursera, and Udacity that offer business courses for the corporate market, as well as “corporate universities,” including one at Google and the Disney Institute. Another threat to business schools comes from the rise of executive coaching. “One of my fears is the sustainability of all these models,” says Hockley. “There will be winners and losers.”

Competition is fueled by strong appetite for executive education, even as companies face financial pressure. Inflation and high interest rates would generally put learning and development budgets at risk, but the picture is nuanced at a time of low unemployment and high staff turnover.

The global corporate training market was valued at over $345 billion in 2021 and is projected to reach $493 billion by 2028

“My budget isn’t shrinking, it’s expanding,” says Rory Simpson, executive director of learning at Telefónica, the Spanish telecommunications operator. “I really believe there is a revolution in learning. If you ask employees what they want from HR, after payroll, the next most important thing is education.”

He highlights a battle over his expenses: “The consultants are trying to break down my door. We work with business schools but, if they had done their job well, corporate universities would not exist because companies would have what they need”.

The problem is that business schools focus on qualifications rather than the skills companies need, he argues. “They have to realize that what we do is much more than courses. What we’re trying to do is give people hope for their future.”

If business schools had done their job well, corporate universities would not exist

As companies look beyond academia, startups bring unique strengths to executive education. Since its launch in 2014, McKinsey Academy has trained nearly 1 million people in areas such as digital transformation, operations, sales, and sustainability. The firm says the closeness to its clients means it can tailor the programs to their needs.

Furthermore, a focus on applying theory in practice, through simulations and training, is crucial to your offer. “We don’t want to get stuck in theory land,” says Ben Hall, the global leader of McKinsey Academy. That shortcoming partly explains why, while two-thirds of business leaders surveyed by McKinsey in 2020 said their organizations placed great value on learning, only one-third said it achieved their goals or impacted their business.

New entrants are implementing technology to remedy shortcomings, including the limited reach of on-campus programs. Hadi Moussa, managing director for Europe, the Middle East and Africa at Coursera, says that online learning has democratized executive education; Technology has made it possible to upskill an entire organization, rather than just the top managers. “We build capabilities at scale and at lower cost,” he says.

In addition, he believes that corporate clients may prefer online providers, many of whom have been convinced to embrace online learning during the pandemic. Coursera for Business has enrolled more than 3,500 companies since its launch in 2016. “Businesses are looking to optimize their spend in this economic environment,” says Moussa. “A few years ago, learning was seen as more of a cost center, but now it’s seen as a critical need.”

The market is getting tougher for business schools, but they have advantages in their neutrality, strong pedagogy, and scholarly research. “It seems that the business world doesn’t like theory, but it’s very important,” says Melanie Weaver Barnett, executive director of Unicon, a consortium of business schools for executive education. “We are teaching concepts that have been tested and validated based on evidence, it is not hot air.”

Strong brands and extensive experience also count in favor of schools. Many are now responding to the increased rivalry by offering more shows online, customizing the content, and forming partnerships to bundle the experience.

“The barbarians are at the door,” says Anne-Valérie Corboz, associate dean for executive education at HEC Paris. “But the interesting thing about these players is that we are competitive but also complementary.” The French school is working with several academic organizations to offer an ESG training program for Bain & Company consultants.

Andrew Crisp, a UK-based education consultant, believes that structural changes are needed for business schools to protect their turf. He says the academic bureaucracy makes them less receptive to industry changes and some may consider separating their executive education units into a new entity. “Growing market share means having a business model that is not 20 years old.”