The Continuing Search for External Funding of Business Schools: A Next Generation Approach to

Executive Education

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• 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

Center for Executive Education (CEE) Statistical Profile

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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 executivesDegree Programs: specialized MBAsNon-Degree Programs: short courses on Total Operations Excellence (TOPEX)

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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

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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)

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TOPEXNon-Degree

Programs

LEAN ENTERPRISE

CHANGE MANAGEMENT

SIX SIGMA

SUPPLY CHAIN

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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

Center for Executive Education

Honor Roll AEROSPACE & DEFENSEBoeingGeneral DynamicsGoodrichHoneywell Intl.Lockheed MartinNorthrop GrummanRaytheonRockwell CollinsTextronUnited TechnologiesCHEMICALSAir Products & ChemicalAshlandBayer CorporationDow ChemicalDupontEastman ChemicalEngelhardPPG IndustriesRohm & HaasCOMPUTERS & SEMICONDUCTORSApplied MaterialsDell ComputerHewlett-PackardInt. Business MachinesIntelNational SemiconductorNCRPitney BowesSanmina-SCISun MicrosystemsTexas InstrumentsXerox

ELECTRONICSEatonEmerson ElectricGeneral ElectricMaytagPhilips Electronics N.A.Rockwell AutomationSiemens CorporationSPXTyco InternationalWhirlpoolFOOD & BEVERAGESAdolph CoorsAnheuser-BushBrown-FormanCampbell SoupChiquita Brands Inc.Coca-ColaCoca-Cola EnterprisesConAgra FoodsGeneral MillsGold KistH. J. HeinzKelloggNestle USAPepsi AmericasPepsi BottlingPepsiCoPilgrim’s PrideSara LeeTyson FoodsUnilever U.S.

FOREST & PAPERBoise CascadeBowaterGeorgia-PacificInternational PaperLouisiana-PacificMeadWestvacoPotlatchWeyerhaeuserGOVERNMENTArmy Corps of EngineersCanadian Postal ServiceDefense Logistics AgencyInternal Revenue ServiceOak Ridge National LabsTennessee Valley AuthorityU.S. Air forceU.S. ArmyU.S. Dept. of InteriorU.S. NavyU.S. Postal ServiceHOUSEHOLD & PERSONALAvon ProductsCloroxColgate-PalmoliveDialKimberly-ClarkProcter & GambleStanley WorksINDUSTRIAL & FARMCaterpillarCumminsDeereDoverIngersoll-RandITT IndustriesParker Hannifin

MOTOR VEHICLE & PARTSDaimler ChryslerDelphiFederal-MogulFord MotorGeneral MotorsGoodyear Tire & RubberHarley DavidsonJohnson ControlsNavistar InternationalTRWVisteon PACKAGING, CONTAINERSBallBemisCrown HoldingsSilgan HoldingsSmurfit-Stone ContainerSonoco ProductsTemple-InlandPHARMACEUTICALS & MEDICALAbbott LaboratoriesAmgenBausch & LombBecton DickinsonBristol-Myers SquibbEli LillyJohnson & JohnsonMedtronicMerckPfizerSchering-PloughWyeth

PRECISION EQUIPMT3M DanaherEastman KodakPerkinElmerTektronixThermo ElectronPRINTING & PUBLISHINGMcGraw-HillR.R. Donnelley & SonsStandard RegisterRETAILERS & WHOLESALERS Anixter InternationalBest BuyCircuit City StoresGraybarUnited StationersTRANSPORTATIONBurlington Santa FeConsolidated FreightwaysCSXDelta Air LinesFedEXJ. B. Hunt Transport Norfolk SouthernRoadwayRyder SystemUnion PacificUnited Parcel ServiceYellow FreightUTILITIES & TELECOMMUNICATIONAT&TBell SouthEntergySouthern Co.

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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

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A Case Study: Aerospace-Defense Transformation• Strategically focused on A-D starting in 2002• AMBA degree program and Lean MRO non-

degree 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.

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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

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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!

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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

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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

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COA # 4National 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

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A Snap-Shot of the Desired “To Be” End State

Mat

eria

ls &

Prog

ram

s

Pro po sa ls

Materials & Programs

National Clearing-

house

DOD

University

Corporate

University

National

University

Corporate

Sponsor

DOD

Sponsor

Local

College

Proposals

Materials & Programs

Funding & Guidance Funding & GuidanceProposalsM

aterials & Programs

Materials & Programs

Proposals ProposalsRFPs & Funding

Proposals

RFPs & Funding

RFPs & F un di ng

RFPs & Funding

Materials & Programs

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Shortcomings of the “As Is” Educational Model

1. 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.

2. We have no mechanism to help the isolated players work together to solve big problems of national importance.

3. We lack the ability to effectively transfer best practices between military and commercial organizations.

4. 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.

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Shortcomings of the “As Is” Educational Model (cont’d)

6. Though we are duplicating efforts, uncoordinated educational efforts are still contributing to the Tower of Babble problem.

7. We are failing to adequately absorb the tremendous up-front costs associated with quality program development.

8. We are grossly underutilizing technology.

9. Educational and developmental resources are not available where and when we need them at the local college / school level.

10. We are losing tribal knowledge faster than it is being replaced.

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Developing a National Curriculum Requires a National Network

Mat

eria

ls &

Prog

ram

s

Pro po sa ls

Materials & Programs

National Clearing-

house

DOD

University

Corporate

University

National

University

Corporate

Sponsor

DOD

Sponsor

Local

College

Proposals

Materials & Programs

Funding & Guidance Funding & GuidanceProposals

Materials & Program

s

Materials & Programs

Proposals ProposalsRFPs & Funding

Proposals

RFPs & Funding

RFPs & F un di ng

RFPs & Funding

Materials & Programs

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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.

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A Pilot Test of the National Curriculum Concept

1. Select a medium-sized, integrative topic

2. Work across segments of DOD/A-D sector

3. Work with partner schools in each of four categories: A. Large Universities

B. Corporate Universities

C. DOD Universities

D. Smaller Schools and Colleges

4. Build in several funding gates to limit risk

5. Use small rapid experiments to gain experience and work out bugs

6. Grow only as success warrants

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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

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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”?

The Continuing Search for External Funding of Business Schools: A Next Generation Approach to

Executive Education