Professors are now brands; As professors themselves become bigger brands, firms are reaching out to the instructors directly instead of going through the schools

May 1, 2013, 6:45 p.m. ET

Professors Avoid the Middleman in Hawking Expertise to Companies

By MELISSA KORN and CAROLINE PORTER

For years, when big companies needed to train their leaders to manage large teams, change their thinking on product development or soak up the latest findings about globalization, they called on business schools. Schools’ executive-education offices would suggest a professor or two to lead a brief course on campus or at company offices, for which companies would pay thousands of dollars. Professors usually got a small cut of the earnings. But as professors themselves become bigger brands—aided by TED talks, Twitter and networks on sites like LinkedIn—firms are reaching out to the instructors directly instead of going through the schools. Faculty, meanwhile, are doing more to court outside teaching opportunities. It is a subtle change—executives in those workshops see little difference—but the shift saves companies money and endangers a revenue stream for the educational institutions.“Schools used to have a lock on faculty,” says Kannan Ramaswamy, a management professor at Thunderbird School of Global Management. “They were talent scouts to direct companies to faculty.”

One guru, Columbia Business School professor Sheena S. Iyengar, says she’s seen a huge uptick in interest directly from companies since the 2010 publication of her book, “The Art of Choosing.” She has lectured to or trained executives at dozens of companies, including Google Inc. GOOG -0.50% and Shiseido Co., 4911.TO +0.36%on topics including consumer choice and leadership, and now has “more requests than I can handle.”

Daisy Dowling, head of talent development at Blackstone Group LP, BX -0.97% says she and her peers now build their own global contact lists to determine which subject-matter experts match a company’s culture, offer relevant content and are entertaining teachers to boot.

“In the supermarket of executive education, we’re not going toward prepared foods,” Ms. Dowling says. “We’ll make things with the ingredients we want.”

Deans frown on professors’ poaching corporate clients but are hesitant to ban independent work, since those engagements give professors insights into companies and help schools forge ties with potential employers.

San Francisco State University management professor John Sullivan, who runs an independent consulting company, says school-arranged programs often cost double what the professor actually earns; Mr. Ramaswamy says the markup can be even greater. Professors can charge more on their own—thousands of dollars a day, some say—and by avoiding the administrative middleman, companies still may save money in the end.

Schools, already beset with declining demand for two-year M.B.A.s and diminished corporate interest in open-enrollment programs for executives, can ill afford to lose money from custom executive-education programs, which can bring in tens or even hundreds of millions of dollars a year.

At Thunderbird, executive-education revenue now constitutes 35% of the school’s total revenue. At Swiss business school IMD, it makes up nearly 90%. The UC Berkeley Center for Executive Education, a nonprofit spinoff of University of California, Berkeley’s Haas School of Business aims to hit $50 million in annual revenue by 2020.

Business schools are beginning to respond to the threat, says Mike Malefakis, associate dean of executive education at Columbia. His school is launching new online programs this year to attract companies that want a virtual classroom; other schools are heavily marketing their experts in hot fields like global leadership and innovation. And the recent restructuring of Haas’s executive-education arm is intended to improve efficiency.

While executive-education programs still draw plenty of willing customers—a recent survey showed that most schools still expected growth in this area—Mr. Ramaswamy says schools need to rethink their expansion plans, customer service and cost structures if they hope to keep those clients.

“If deans are going to look at it as a cash-cow opportunity,” he says, “they will be surprised.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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