Executive education, says Robert E. Mittelstaedt, vice dean and director of Wharton’s Aresty Institute of Executive Education, “isn’t what it used to be.” Consider the following:
• The government of Jiangsu province in northeastern China has asked Wharton and Penn’s Graduate School of Education to create a management course for senior government officials and company executives this fall. Shanghai’s municipal government and Beijing’s national government are pursuing similar programs.
• ScottishPower, a $1.4 billion multi-utility company in Glasgow, recently partnered with Wharton to design a yearlong management development program effort for the company’s top executives. Participants attend courses at Wharton, ScottishPower and other executive education programs in the U.S. and abroad.
• Growing interest in research issues related to electronic commerce led last year to the creation of the Wharton Forum on Electronic Commerce spearheaded by Wharton faculty and executive education staff. Seven companies, including British Airways and State Farm Insurance, have signed on as learning partners and are actively collaborating on the Forum’s research agenda.
• A joint venture between Wharton and the Liechtenstein Global Trust (LGT), a $42 billion asset management and private banking company, is part of what LGT Chairman H.S.H. Prince Philipp describes as a “truly innovative and unconventional program.” The 10-week course for 60 senior managers takes place over a three-year period and includes — in addition to courses in marketing, international finance and leadership development — sculpture classes and rowing on the Schuylkill River.
• A major consulting firm recently hired Wharton to teach a 12-week customized course on business fundamentals to the company’s non-business employees, including engineers, lawyers and health care professionals.
• The Director’s Institute, a “living case” that puts directors on the board of a (fictitious) multinational company, is now entering its fourth year and has expanded to include a Director’s Forum offered every eight months in London. Each year the program presents a Board of the Year Award to (real) companies that excel in meeting the needs of shareholders, employees and society. In 1995 and 1996, the winners respectively were Mallinckrodt Group, Inc. and Campbell Soup Company.
• Caracas-based Petreleos de Venezuela SA (PDVSA), one of the world’s largest oil companies, asked Wharton this spring to create a customized three-day course for its chief information officers in connection with a major outsourcing and restructuring effort. PDVSA has already enrolled employees in both open enrollment and customized courses in strategy and finance (including a week-long customized program that Wharton faculty taught to senior management last May in Caracas) and this summer has accepted several Wharton MBA students for internships.This year alone, more than 10,000 men and women will attend a Wharton executive education program. The School offers 230 courses (compared to 111 five years ago) grouped under the general headings of developing leadership, gaining financial advantage, managing the enterprise, strategies for growth, healthcare management and senior management.
The curriculum includes, for example: three 5-week advanced management programs for senior executives; four 2-week executive development programs for managers moving from functional to general management responsibilities, and an International Forum for 35 senior executives interested in exploring global strategic issues during sessions in Philadelphia, Bruges, Kyoto, Prague and Shanghai.
Of the 230 courses offered, 120 are customized for specific companies or industries. Each course is assigned to an executive education staff member who works closely with a faculty program director and other participating professors as well as representatives of the client company or association. “It ends up broadening the set of faculty involved and also makes sure that the client’s needs are met,” says Mittelstaedt. “We see it as a unique cross between consulting and education.”
It’s the custom business, Mittelstaedt adds, that sets Wharton’s executive education program apart from others. “A lot of what are called custom programs at other places are open enrollment courses which have been pulled off the shelf and tweaked a little to make them seem designed for a particular company. In most of our custom business, the programs are developed very explicitly and specifically for our clients. No one else in the business does it this way.”
Recent clients include Asea Brown Bovari, Ltd., AT&T School of Business, Bell Atlantic Corp., Cigna Corp., Dean Witter Reynolds, Inc., Unum Life Insurance Co., Merrill Lynch & Co., Pfizer, Inc., Samsung Group, Sharp Electronics Corp., Siam Cement Co. Ltd., the Young Presidents Organization, the Securities Industry Association, the Association of Investment Management Sales Executives, the Association of Professors of Gynecology and Obstetrics, the American Institute for Chartered Property Casualty Underwriters, the Insurance Institute of America, the International Foundation of Employee Benefit Plans and the Society of Actuaries, to name a few.
A common thread underlying interest in all these programs is the need to operate in an international marketplace. “Globalization is no longer a theory,” says Mittelstaedt. “People don’t want to know how you globalize your business; they are already doing it. They need to understand what happens when time goes down to zero, when their organization has to respond to developments not just rapidly, but instantaneously.
“We have shifted from an era when people thought about management development as an orderly process stretched out over one’s career to a point where you have to look at it as just-in-time development for people, similar to just-in-time inventory systems.”
Not to mention just-in-time decision making which may be one way to view the pressures on managers these days to come up with global solutions quickly and efficiently. Four of Wharton’s most recent course additions address this need:
• Discovery Driven Planning, geared toward managers in the process of launching a new product initiative or business development project. Participants learn how to identify and test assumptions, make mid-course corrections or pull the plug on doomed projects, and convert assumptions into knowledge before committing to expensive investments.
• Critical Thinking: Real-World, Real-Time Decisions, designed for managers who are faced with too much data, too little time and no framework in which to make decisions.
• Capitalizing On Brand Assets, aimed at defining, measuring and building brand equity.
• Prospering in a Newly Deregulated Environment, designed for managers with responsibility for marketing and strategy in newly deregulated industries.
In the midst of its on-site course expansion, executive education itself has gone global. This year, the School is offering programs in England, France, China, Japan, India, Singapore, Thailand, Taiwan and throughout most of Latin America.
The latest example is the Wharton/GSE Chinese Executive Business Competency Program referred to in the introduction. Although still in discussion stages, the program is envisioned as a year-long management development program for 50 senior government officials from Jiangsu province. The first six months will take place in a Chinese university learning English and computer science, followed by six months in the U.S. where the focus will be on business education and cultural enrichment.
“In China, the government runs 80 percent of the businesses,” says Mittelstaedt. “So it is extraordinarily concerned with competition, marketing and market orientation … The challenge for Chinese managers is to move from a planned economy — where people were used to following orders — to a market economy in which people have to be creative.”
A Utility Company on the Move
Three years ago ScottishPower, Scotland’s largest industrial company, asked Wharton to help them design a year-long development program for senior managers that would better prepare the utility company to handle the challenges of deregulation. “ScottishPower was originally an electricity generation supply company,” notes Oonagh Gaff, Scottish-Power’s management development manager. “But since we were privatized in 1991 we have pursued a multi-utility strategy that involves leveraging the customer base to sell a range of utility products,” including gas, telecommunications and water.
The business climate is about to change even more, Gaff adds, with deregulation of the domestic market in 1998. “Up until now we have been competing only for large industrial customers. But the domestic market in the United Kingdom and Scotland goes free next year. That will be of major importance to our organization. We will no longer have a captive audience of customers.
“Where we need to compete is on customer knowledge and understanding, and also on the uniqueness of our multi-utility products. We are the only multi-utility in the UK and internationally. It’s a huge advantage if we can capitalize on it.”
Which is where Wharton fits in. “ScottishPower recognized that the future of the business would be very different from the past,” notes Jane Hiller Farran, director, corporate programs at Aresty. “They knew they needed to get their tier of senior managers ready to deal with that future. So we put together a year-long program that runs for three successive years and targets such areas as marketing and finance, but also leadership, strategy and long-range planning.”
Robin MacLaren, chief engineer, power systems, was one of 15 senior managers at ScottishPower who recently completed the program. “It gave us time and space to reflect on strategic issues relating to the competitive market for energy supply and the development of the UK utility sector,” says MacLaren, who supervises a staff of 190 and oversees all central engineering issues. “For example, we are now able to better assess risk in the commercial market and have become more aggressive in dealing with major contracts.”
MacLaren also noted increased networking among senior managers. “In tackling certain market sectors for large customers, businesses which were not talking closely enough are now operating more as a team,” he notes. “There are more synergies within groups and the sense of people working together towards a common purpose.”
MacLaren found particularly useful the program’s discussions of managing technology and innovation, the creation of virtual teams and the “interaction between tops, middles and bottoms” — i.e., the dynamics among organizational levels.
The program begins with a two-week workshop that focuses on the critical issues facing ScottishPower and uses these issues as a basis for managers to form their own personal learning agendas. Participants then attend an executive education program at one of four schools: Wharton, INSEAD, the Kellogg School or the London Business School. “We recommend programs in addition to our own because we feel that our courses are not for everyone, nor could we accommodate everybody in the space of a year,” says Farran. “There are probably five to six top-notch advanced management programs around and each one has a totally different character. A company should attend one that meets its learning needs and philosophy.”
Senior managers from ScottishPower also convene four times during the year in Scotland for team reviews with Wharton faculty and three times during the year for special issue workshops. “These are designed around what the group and the executives identify as critical needs,” says Farran. “For example, last year they chose to focus on core competencies, mergers and acquisitions and leveraging value out of a mature business.”
One of the key insights that the first group of 15 senior managers brought back to the company last year was “an in-depth understanding of where ScottishPower fits in industrial and organizational terms,” says Gaff. “As an engineering-based organization, we tend to think in a linear way about how an organization operates. But a multi-utility must work to take a systems approach to the company … That has led to new insights in how we go forward with our core competencies.”
Over the past year, adds Farran, the executive education division has received several requests from companies like ScottishPower “that want help, not designing a course, but a whole development effort for a section of senior management. That’s different from saying ‘we have these people in place and want training for them as they are.’”
Charging Into Cyberspace
“We believe in our hearts that electronic commerce is going to become very important,” says Nicholas Doran, general manager, distribution, for British Airways, the world’s largest international carrier. “Air travel for most people is not a frequent purchase, so on its own, it will not compel consumers to start using the Internet, interactive television or other media. There will be other drivers of Internet usage. That requires us to take a broad view of this issue outside our own industry …
“We are interested in exploring how we can use the new media to reach customers directly or in different ways than we do today.”
British Airways is one of seven member companies of The Forum on Electronic Commerce, a research-oriented initiative organized by several Wharton professors in conjunction with executive education. The companies — AT&T Universal Card, Fannie Mae, Johnson & Johnson, Rosenbluth International, Safeguard Scientifics, State Farm Insurance and British Airways — have each provided substantial financial support for the Forum and are already setting the agenda for research and discussion. At the Forum’s second meeting in June, for example, reports were presented on three topics: advertising effectiveness, channel conflicts and analysis of click stream data.
“Companies today realize that in many cases their businesses will either be changed or eliminated if they don’t understand what is happening in electronic commerce,” notes Eric Johnson, professor of marketing and operations and information management, and an organizer of the Forum.
“The beauty of this whole initiative,” he adds, “is that what is new and interesting to faculty is also new and interesting to industry. The difference between research and the real world is smaller here than in almost any other area I know of.” Research projects already launched by Wharton faculty involved in the Forum include:
• Studying how people acquire information from electronic shopping services on the World Wide Web. Using eye tracking equipment and computerized process tracking tools, Gerald Lohse, assistant professor of operations and information management, is developing models that can help in designing future information products, retail kiosks and multimedia information services. Initial applications include work on Internet yellow page directories and personalized online retail catalogs that dynamically adapt to user preferences.
• Examining the development of broadband networks to reach every home and business in the United States. The study, by Gerald R. Faulhaber, professor of public policy and management, is analyzing the nature and speed of development of these networks and their impact on business.
• Assessing the effectiveness of on-line advertisements that link a potential customer from one site to another. David Reibstein, William Stewart Woodside Professor of Marketing, is looking in particular at how the “relatedness” of the linked sites affects the impact of on-line links.
• Analyzing the issues raised by e-cash and electronic commerce for national and international economic and political governance. The study is being done by Stephen J. Kobrin, William H. Wurster Professor of Multinational Management.
• Studying the impact of color web design on consumer behavior and choice. Johnson and doctoral student Naomi Mandel propose that color can prime certain attributes and cause certain reactions in consumers. Johnson is also analyzing click stream data to help companies better understand the needs and usage patterns of their customers.
“Wharton offers a great resource for companies like ours that have the potential for being significantly affected by electronic commerce,” notes Danamichelle O’Brien, WG’92, director of marketing at Rosenbluth International. “The Forum is a resource not just for business strategy but also in the areas of public policy and technological innovation.” Rosenbluth is especially interested in “how electronic commerce will affect differential pricing in the travel products arena, including airline pricing, package pricing, and pricing behavior among consumers and suppliers.”
Many other research initiatives on electronic commerce, says Alison McGrath Peirce, director of senior programs, tend to focus on engineering and technical aspects, such as payment security and data base interfaces. The Forum on Electronic Commerce has been positioned instead “to tackle the strategic, marketing and customer interface issues that we feel will be the major factors in the success of electronic commerce. Basically it encourages companies to look at the information they have as a critical asset and then transform that asset into an advantage.”
Balance Sheets and Other Business Fundamentals
“We have a group of businesses that function under a fibers division, and that division is always interested in new opportunities, whether it is buying or selling,” says Miguel A. Desdin, WG’94, business controller, textile nylon, AlliedSignal in Richmond, Va. “The mergers & acquisition course offered a very good grounding in how deals function and in the mechanics of how deals get approved. It also offered an understanding of why some deals fail.”
“Like most physicians who get into management,” says Dr. Henry Dirk Sostman, chief of radiology at New York Hospital, “I was chosen for my current position because I am a good doctor and a good scientist. Yet this job has virtually nothing to do with either of these things. It is all about management and finance. I have a $30 million budget, about 200 employees and no formal training whatsoever in how to read a balance sheet or evaluate a capital project.
“The finance and accounting course I took this year was an opportunity to speak to people from completely different areas faced with the same kinds of problems … I have been able to use the course in discussions with our finance people, in managing my department and in carrying out my role in our physician organization.”
Executive education’s “nuts and bolts” courses — on subjects like sales force management, pension funds, industrial marketing strategy, negotiation, new product development and strategic alliances — remain an anchor of the program and a major contributor to its growth.
Two of the biggest and most popular courses are finance and accounting for the non-financial manager (F&A), and mergers and acquisitions (M&A), says Peirce. A sixth F&A session was added this year “partly because of an increasing need across the board these days for people to understand issues of cash flow, capital budgeting and reading and interpreting financial statements. In many organizations, the P&L responsibility is being pushed lower and lower.”
With mergers and acquisitions activity at an all-time high in the U.S. and accelerating in Europe, the M&A class has been revised to add more people as well as to allow them to customize course content based on their individual needs. Participants can opt for 21 electives, including advanced financial topics, integration/HR considerations, valuing brand equity and deal structure/risk analysis.
J. William Busch, district manager, international business development for AT&T, customized the M&A course he took last fall to give it more of a financial focus. “The course was very good in offering a broad overview of the mergers and acquisitions area as well as providing information about such topics as valuations and due diligence,” notes Busch, whose job involves analyzing new ventures and negotiating agreements.
For David A. Longfellow, WG’81, strategic programs manager for Lucent Technologies in Allentown, Pa., the M&A course “helped me view all the areas that need attention, from establishing a general framework for analyzing acquisitions in general to knowing what to look for in a financial model.”
The finance and accounting course looks at accounting terminology, valuation concepts, the role of different financial statements, the quality of earnings, how to distinguish income from cash flow, the accounting process and how to analyze financial reports.
James White, vice president/managing director at Ralston Purina in St. Louis, cited the “practical night study work” of the F&A course he attended in March. “We took a somewhat academic view of a subject during the day but then each evening we talked about the practical application of the day’s topic, such as how to value a business. It really closed the loop on applying what we had learned to our responsibilities as managers/leaders.”
Course participant Dr. Silvia Nora Bonaccorso, a physician who is vice president, marketing and medical communications, at Merck & Co., has “a multimillion dollar budget that I administer and a finance group of five people that reports to me. I thought that I should be able to grasp more fully the principles of accounting and finance rather than having to depend on my financial group … I have learned not only how to read a balance sheet but also an income statement and an annual report, and to read between the lines, see things that are there and know what they mean.”In the midst of so much activity, is Wharton’s executive education division removed from what goes on in other parts of the School? Hardly. “Much of the leadership work that has been an important part of both the MBA and undergraduate curricula at Wharton was experimented with first in our Advanced Management Program before it ended up in the MBA and undergraduate programs,” says Mittelstaedt. “Additionally, some things we have developed in the Director’s Institute have found their way into MBA course material on corporate governance.
“It works the other way as well. A negotiation course that is taught to both the MBA students and the undergraduates has become a highly successful executive education workshop that we now offer to senior managers three times a year. “The ties between executive education and the rest of the School continue to be significant,” adds Mittelstaedt. “They can only add to the strengths of all our programs.”