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Executive Education in State of Transition

Professional development offerings have become more specialized and convenient, with a focus on solving known problems and producing immediate results.

Professional development offerings have become more specialized and convenient, with a focus on solving known problems and producing immediate results.

One of the fastest-growing industries over the last decade is the ‘excellence business.’ Today, professional development courses teach a variety of subjects through every medium, from in-person through webinar and DVD. And unlike traditional courses, which were financed by student tuition, some suppliers have begun offering courses as a value-added service for clients and agents.

The pursuit of excellence has become a multimillion- dollar industry in Canada alone.

However, it is an industry that has been in a state of transition for some time.

Once upon a time, it seemed that businesses were interested in ‘knowledge for knowledge’s sake.’ Executives took high-level courses on broadly defined topics like Marketing Strategy. Differentiation was based on the educator’s reputation, since most everyone seemed to want to study the same things. It was just a question of offering the course at the right time and place.

Course Names

Well, not really. People didn’t really want to study the same topics but suppliers were locked into traditional course names and formats. The small base of highly regarded suppliers made this a seller’s market.

However, as new suppliers arrived on the scene, the market became congested. Suppliers, eager to differentiate their courses, developed more specialized versions of their programmes.

This changed the entire economics of the industry. The average audience size changed.

Open-enrolment courses of 80 people became two variations on the same course and each had an audience of 40: less revenue per course, with no reduction in fixed costs such as marketing, instructors, room rental, etc. In addition, more specialized courses meant more specialized materials and instructors. Under these new economics, there was a definite reduction on how much one could spend, per audience member, to recruit them, serve them and provide after-sales service.

Buyers changed, too. The differing economics of education for big versus small firms became evident. Larger firms that had been sending multiple people to the same programme discovered they could conduct an in-house programme, often with the same specialized instructors and materials, and train entire groups for just slightly more than the cost of paying multiple tuitions.

As small- and medium-sized firms (SMEs) became the main source of audiences, demand rose for hands-on workshops, since the distinction between ‘thinker versus doer’ is smaller in SMEs.

Reduced Demand

It is tempting to expect recessions to reduce the demand for seemingly discretionary expenditures like executive education. However, there is a school of thought that believes the opposite should be true: recessions make apparent a range of problems that businesses have to solve and so the demand for knowledge about alternative solutions should grow.

If the education being given is generalist in nature, then the expenditure really needs to be seen as an ‘investment’ that brings a return over time. The problem is that accounting and tax laws don’t let firms amortize that investment. Instead of being recorded as a depreciable ‘asset,’ the cost is recorded as an expense, which reduces income at a time when income is likely already being depressed. The result? Less demand.

During a recession, executive teams are anxious to fund ‘shovel-ready’ initiatives that have a near-term, if not immediate, impact on their bottom line.

In fact, the firms that are most successful in maintaining their ‘investment’ in people are those who are able to finance that investment through savings gained through ‘shovel-ready’ efficiency gains.

The bottom line is simple: the type of executive education that will be in highest demand in recessionary times is that which deals less with overall, general bodies of knowledge and more with a teaching method and content that’s focused on solving known problems. In short, the best programmes become those with a clear and direct linkage to near-term, bottom-line performance.

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