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Disruptive Innovation: Industry Thought-leaders Share Their Views

Disruptive Innovation: Industry Thought-leaders Share Their Views

By: Michael Devlin, Karin Kuta, Arthru Services

Released: February, 2016

A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances.

The term was defined and phenomenon analyzed by Clayton M. Christensen beginning in 1995. At last fall’s highly successful UNICON Team Development Conference, the notion of disruptive innovations surfaced during multiple sessions.  Sometimes by design – when the session topic explicitly addressed the issue of competitive pressure – but also in much more spontaneous ways.   We noted several sessions during which the conversation turned to the theme, even when the session was ostensibly dealing with a loosely related matter.

This obvious interest in the idea of innovations that could change university-based executive education – either from within, or from external sources – led to the commission of this article.  We decided to invite several thought-leaders in our industry to share their views on this important topic.  Those kind enough to share their wisdom with us were:

  • Heather Christensen, Associate Dean, Executive Education, Alberta School of Business
  • Peter Hirst, Associate Dean, Executive Education, Massachusetts Institute of Technology’s Sloan School of Management
  • Javier Marcos, Director of Custom Programs, Executive Education, Cambridge Judge Business School
  • Li Zhou, Assistant Dean, Cheung Kong Graduate School of Business

 

Technology:

When we think about disruptive innovations in 2016, we tend to think first about technology.  Which technology will enable the next iPhone, Uber or Netflix?  Certainly, within our industry, much has been written about MOOCs, SPOCs and other technology-enabled learning delivery mechanisms that might feel like disruptive innovations.

Peter Hirst views technology quite simply.  “It’s now a base requirement,” he said.  “We need to live in the reality of the working conditions of our customers.  We simply must use technology to help our clients learn.”   But to Peter, technology might pose another kind of threat to university-based executive education.  One that has more to do with the aggregation of knowledge, and less to do with the dissemination of learning.

“Maybe Google is the real disruptive innovation,” he said.  “Everything you need to know you can find through effective use of a search engine.  If you work at a start-up, are you going to spend time at a university to learn what you need to know, or will you just Google it?  And if the growth of the economy is happening more and more at the start-up level, perhaps executive education is less relevant than some form of Just In Time, distributed learning that helps me deal with today’s business problem today.

“Another issue is the length of time employees now spend at one company,” continued Peter.  “If someone is only going to stay with my company for 3-5 years, why should I invest in their development?  Wouldn’t it be easier to just hire someone else – also on a 3-5 year stint – with the exact qualifications I need?”

Javier Marcos takes the notion of ubiquitous knowledge as a disruptive innovation a step further.  “Traditionally, research was taught by business schools,” he said.  “But now the client has direct access to the content through the Internet.  They no longer need a ‘program’ to access knowledge.  If I want to learn about mindfulness, for instance, I can access everything I need to know without a ‘contract’ with a business school.  As an industry, our counter argument has been, ‘Well, it’s not the same as being in a classroom.’  I would argue that watching a TED Talk on mindfulness could be, for some people, as emotionally engaging as watching a professor deliver that same talk in a classroom.”

Li Zhou shared yet another perspective on technology as a source of disruptive innovation.  He focused on the varied level of awareness and understanding of technology within the university environment.  “It seems to me that university-based providers, especially engineering schools or departments of engineering at a university, are leveraging both a deeper understanding of technological innovation, and have more experience with supporting start-ups at a faster pace than their counterparts at the business school of the same university, while providing more interesting content.”

Lesson: look no further than across your own campus for a source of disruptive innovation!

 

Consulting Firms:

A second source of disruptive innovation identified by our panel of thought-leaders is consulting firms.  Again, this is not a new observation in the industry, but each of our experts shared an intriguing perspective.

Heather Christensen worries about the breadth of some consulting firms’ offerings.  “They offer free – or almost free – conferences,” she said.  “And they offer expertise and thought leadership.  This is a particular concern for my institution because our faculty is small and therefore we contract with consultants to augment faculty teaching in our programs. This makes it difficult for us to prove our value proposition.

“We are also seeing large consulting firms becoming more aggressive in the MBA market,” she continued.  “We’ve seen the creation of the consulting MBA.  I feel like this is the ‘thin end of the wedge’ and could really have an impact on us down the road.”

Peter has seen an increase in the last few years of the number of large consulting firms offering some sort of executive education.    But to him, this is as much an opportunity as it is a threat.  “We must think about the right outcome for the client,” he said.  “It’s possible that if we partner with these firms, our research combined with their deep knowledge about the Client’s structure and strategy might lead to a better result for the Client.  And that’s in everyone’s best interest.”

Peter also identified a variation on the idea of the large consulting firm as a competitor.  “What about the Cisco’s and IBMs of the world?” he asked.   “They offer training and education to support their product offerings.  Such activity is profitable and complementary to their core businesses.  And some of it overlaps with what we teach.”

To Javier, the difference between consulting firms and university-based executive education departments comes down to one important idea:  “They provide answers, we ask questions,” he said.  “Consulting companies are now offering workshops and education,” he continued.  “But they are ultimately selling a product.  We bring intellectual content, neutrality, and a non-profit approach.  We help our clients re-frame their issues.  As educators with an academic grounding, we are Professional Skeptics.  We create huge customer value when we engage in dialogue that does not take the formulation of management development challenges at ‘face value.’”

While Li recognizes the advantages that university-based executive education providers can offer clients, he worries greatly that they lag consulting firms in a critical area.  “Few business schools offer insight on China and other emerging economies, notwithstanding the role that China and other emerging regions play in redrawing the global business landscape.”

He continued, “Corporate players in the West have moved faster than their counterparts in education.  A plethora of entities from the corporate sector, including consulting companies, investment banks, wealth management firms, and industrial companies, conduct and distribute in-house research reports, organize forums, and provide on-line programs covering emerging economies to attract and serve clients. I receive many more reports on China from the corporates and think-tanks than from business schools.”

 

The Client:

Each of our experts acknowledged the Do It Yourself approach to executive education as a potentially disruptive innovation.  Whether it comes in the form of a sophisticated Learning and Development department housed within Human Resources, or a full-blown Corporate University, companies are finding ways to meet the development needs of their executives in-house.  And the pace seems to be accelerating.

“Many global companies have developed their own in-house leadership development programs that bring in executives from key markets worldwide,” said Li.  “ And they rotate the venues for board and senior executive meetings, moving them from one key emerging market to another. These programs, often designed by consultants who have worked at the company’s headquarters, are usually much more directly relevant to specific management issues or business opportunities in global markets of interest.”

Additionally, Li worries that business schools have been slow to react to the implications of the 2008 financial crisis, and as a result will face tougher and tougher competition from other entities, including in-house development programs.  He said: “Without humanistic care, which addresses all issues that affect a business directly or indirectly, including socials and environmental issues and society’s expectations of business people generally, business schools will lose the public’s interest, and potential users of the schools’ programs and services will find alternative solutions to management issues.”

Heather notes the increasing sophistication of companies’ in-house Learning and Development capabilities.  “New types of learning are replacing our traditional modes of learning,” she said.  “These include mentorship, job shadowing, stretch projects, and coaching that’s provided by a company resource.  This approach carries with it the perception of lower cost, and the notion that the internal corporate trainer has a better understanding of the issues.  In reality, it’s likely that the homegrown program is neither less expensive nor more accurate in defining issues.  But that’s the opinion we have to deal with.”

Peter noted that Corporate Universities are not a new phenomenon, pointing out that General Electric established its management-training center in Crotonville in 1956.  “These corporate training departments rely on universities for their content,” he said.  “And a number of them will hire our faculty directly.  The question we must face is, how do we respond?  Do we compete with these organizations, or partner with them?”

Javier thinks the answer to that question is obvious: partner.  “Learning occurs in the workplace, not in the classroom,” he said.  “We need to connect the learning to the problem as experienced in practice.  One of the challenges we face in making that connection is that we tend to deal with someone in HR, or Learning and Development.  Our brief is based on their understanding of the issue.  It’s a subjective, partial view.  What if they’re biased?  Ideally, for a program to truly address the needs of the executive learners, we would need to engage with them before the program is designed.  That way, we increase our chances of delivering what they actually need.  If we can’t get that kind of access, then the internal department will always have an advantage over us.

 

Dealing with Disruptive Innovations:

Of course, none our experts is prepared to be the victim of any of these potential disruptive innovations!  Each one offered ideas to minimize the threat and, in some cases, to turn disruptive lemons into profitable lemonade.

Heather chooses to focus on the advantages that she believes university-based providers can use to thwart any exogenous threat.  “You can’t underestimate the credibility of a university,” she said.  “We have very specific expertise, and can bring in instructors from all over the world if necessary.  Our external perspective, coupled with a safe environment (for example an impartial versus an company coach) make the university option very attractive.  And most important, our content is built with academic rigor, depth and reach.”

From Peter’s perspective, the work that is being done at universities to better understand how people learn could be a significant advantage for the industry.  “When all is said and done, we want to teach people how to learn,” he said.  “The better we understand and apply the neuroscience of learning, the more we can help people to become lifelong assimilators of knowledge.  Universities are far out in front of anyone else in this area.  Ultimately, the value we add is helping people change how they think.  That’s an advantage that is more difficult to disrupt.”

Collaboration is one tool that Javier identified to minimize the threat of a disruptive innovation.  “We need to collaborate with other organizations to bring to the clients what they want,” he said.  “Executive education is not an end in itself.  An outstanding outcome for the client is what really matters.  If we are open minded about collaboration, we will always find a place for ourselves in the executive learning and development industry.”

Li echoes the sentiment about being open to partnering with others.  He said, “We don’t look at this as a zero-sum game, in which one party’s gain is another party’s loss. At CKGSB, we are always open to collaborating with both business schools and non-business schools, as long as they add value to help develop the leaders we envision – those who would have global vision, a humanistic or social caring spirit, and innovative mindsets.

“We prefer to concentrate on closing the gap between what business leaders need to become to reach their objectives and what we are missing to take them there, rather than worry about our so-called ‘competitors’.  That is why we work with anyone who can help us achieve our goal of bridging the gap.”

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