BDA CASELET

SPRING 2018

Enterprise Learning
David Fubini, Senior Lecturer of Business Administration at Harvard Business School (MBA 1980
and retired McKinsey senior partner), looked at the yellow pad on which he had jotted notes during a
meeting with Dean Nitin Nohria. In a few weeks he would be leading a session with the Board of
Dean's Advisors (BDA) on "enterprise learning," or ways the School might leverage and take to a new
level its engagement with companies—primarily through Executive Education and Harvard Business
Publishing, but also via HBX and even the School's extensive library resources. He originally had
anticipated talking to the group about the myriad organizational challenges associated with this
endeavor—something he'd been giving a fair amount of thought to over the past year-plus as the
faculty advisor to the enterprise learning effort. But the dialogue with Nitin led to thinking at a very
different level about the pluses and minuses of deeper relationships between the School and its
faculty with companies. As a former member of the BDA himself, David wondered what the group
would think.

Executive Development at Harvard Business School

From its founding, HBS had focused on educating individuals—or, in the words of the School's
mission, educating leaders who make a difference in the world. The School was agnostic about the
companies its students worked for and the roles they worked in; rather, it was the students'
responsibility to leverage what they learned to benefit of their organizations. The School's focus on
the education of individuals was most evident in the MBA Program, but carried over as well when it
entered into publishing through Harvard Business Review (HBR), founded in 1922, which
disseminated the work of HBS and other business scholars and leaders to executives in organizations;
and into Executive Education, launched in 1945 as part of an effort to retrain veterans returning from
World War II. Both enabled the School's faculty to share their research and test their latest thinking
while bringing them closer to management practice.

Over time the two groups had grown substantially. In 1993, Harvard Business Publishing (HBP)
was created as a wholly-owned subsidiary. By 2018 it encompassed (1) the HBR group (including
Harvard Business Press books, an online content platform at hbr.org, and a range of events to build
community), (2) the higher education group (which distributed cases, reprints, simulations, and other
pedagogical tools to educators and their students), and (3) the corporate learning group (including
Harvard ManageMentor, an online leadership development platform sold as a site license to
companies featuring videos, action focused lessons, assessments, and metrics). HBP’s FY17 revenue
was $229 million, and it contributed $33 million (including royalties) back to the School to support,
among other things, faculty and faculty research (see Exhibit 1 for an overview of HBP).

Similarly, Executive Education had grown since its founding to comprise an array of program
types: (1) Comprehensive Leadership Programs (CLPs), like the Advanced Management Program,
which brought cohorts of participants to campus for weeks at a time and granted alumni status at the
completion; (2) Focused programs, such as Reimagining Strategy, that highlighted timely and
relevant faculty research and were typically 3-5 days in duration; (3) Global programs, such as the
Senior Executive Leadership Program, in selected regions of the world such as China, India, the

________________________________________________________________________________________________________________
This case was developed for the Board of Dean's Advisors meeting. Funding for the development of this case was provided by Harvard Business
School. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary
data, or illustrations of effective or ineffective management.

Copyright © 2018 President and Fellows of Harvard College. This publication may not be digitized, photocopied, or otherwise reproduced,
posted, or transmitted, without the of the Dean’s Office, Morgan Hall 120, Harvard Business School.
Enterprise Learning

Middle East, and Africa; and (4) Custom programs, where the School developed a curriculum
tailored to a company's particular needs for its senior leadership. Executive Education's FY17
revenue was $193 million and its contribution to the School was $60 million (see Exhibit 2 for an
overview of Executive Education).

Both HBP and Executive Education had realized impressive results in recent decades, with
CAGRs during 2007-2017 of 5.5% and 7.8%, respectively. Starting in the 1990s, both began to serve
not just individuals, but companies—through Corporate Learning in HBP and Custom programs in
Executive Education. These company-oriented offerings were important drivers of the overall
growth of both groups.

HBX, the School’s newest educational platform, had also grown rapidly. It realized FY17
revenues of $13.2 million and had, since its launch in late 2013, reached nearly 25,000 learners—about
35% of whom were enrolled through site-license or per-seat arrangements with companies rather
than as individuals payers (see Exhibit 3 for background on HBX).

Yet, all these groups faced challenges. For example,

• By FY17, 66% of Executive Education program attendees came from outside the U.S. While
global diversity was beneficial to the learning experience, many participants came to HBS to
learn from their counterparts about American business practices. Ensuring that U.S. firms
and their executives continued to attend programs at HBS was an important priority for
Executive Education.

• It was broadly felt that the School needed to be more engaged with a larger proportion of the
top 100-500 companies—by any measure, and whether domestic or global (see Exhibit 4 for
Executive Education's top clients over the last three years).

• More competitors—educational and corporate—were entering the enterprise learning arena

and gaining ground. These included most major business schools as well as powerful
entrants like leading consulting firms and new educational technology ("ed tech") firms (see
Exhibit 5).

A "One HBS" Approach to Companies

"Harvard Business School is basically a Ferrari in the garage. What saves us all, and
enables us to remain competitive, is the fact that you haven't figured out how to back it
out of the driveway, much less get it humming on the highway."
— Comment from a peer school Executive Dean

Despite the strengths of HBP, Executive Education, and now HBX, some felt that the School
nonetheless was failing to realize its full potential. Angela Crispi (Executive Dean and MBA 1990)
recounted a meeting she and Nitin had with emeritus Professor Ben Shapiro in 2015. "What Ben
made clear to us," noted Angela, "was that we had been remarkably effective in developing distinct
channels with separate lanes of activity. And on many metrics, such as participant quality, we were
doing quite well." She elaborated:

But we had never put ourselves in the shoes of a company to try to develop an integrated
solution for its leadership development. When companies wanted to engage with HBS, they'd
need to call HBP, and then EE, and then HBX. Moreover, we never thought about our
offerings holistically: how an on-campus program might be supplemented by tailored HBR
readings as follow up, or how a custom program could be cascaded down through an
organization via ManageMentor or HBX Live sessions.

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Nitin noted, "Ben's insights, as usual, were spot on. But pursuing a solution to them raised
fundamental questions about our role as an educational institution." He continued:

We haven't sought institutional relationships with organizations the way professional

service firms have. Nor do we know what it might mean to become a 'full talent and
development partner' to a firm. HBS has always embraced and prioritized the teacher–student
relationship, and we want to be careful not to undermine that relationship in anything new we
take on.

Beginning in 2016, a small team of staff from HBP, Executive Education, and HBX had been
working together to map out a more coordinated approach to engaging with companies. There were
fundamental structural considerations to be resolved—everything from educating each group about
the others' offerings, to different compensation systems, to how and where revenue would be
attributed. And it wasn't always easy overcoming the traditional "siloed" approach of the groups.

There were, however, some early successes that generated real excitement. The HBP and
Executive Education teams had, as a starting point, sought to add HBP content as a follow-on to
custom programs, and over time the client list that had signed on for this combination grew to
include companies such as Statoil, Comcast, CSX, and Zeiss. To them, the benefit was clear: it was a
means of extending learning beyond the on-campus experience. In reverse, some of HBP's corporate
learning clients engaged in blended learning programs (on-line and on-campus) that were designed
and delivered in partnership with Executive Education.

The most ambitious engagement to-date was with a large American multinational food and
beverage company. The offering, a $2.4 million contract, was structured as a general management
program for "the next 100" (the tier of leadership in the organization beyond the C-suite). It included
both virtual and in-person content: a 9-day Executive Education program, 3 of HBP's Leadership
Direct modules using HBX Live, an emerging market immersion experience leveraging the MBA
FIELD approach and Design Thinking, the HBX Disruptive Strategy course, and a 5-day capstone at
the company's headquarters. The faculty chair for the program said of the experience, "It was
fascinating to design a program truly from the ground up, thinking about how to utilize all of the
School's resources."

As Dean, Nitin was excited by these opportunities not just for the value he thought HBS could
bring to companies, but also for the value companies could bring to HBS. An important benefit was
faculty development. Few new faculty members came to the School with either an MBA or a doctoral
degree in business; rather, candidates were being drawn from discipline-based fields such as
economics, sociology, and psychology. Additionally, few tenure-track faculty members had real-
world business experience. Closer connections to great companies would create teaching, case
writing, and other venues for these individuals to get closer to practice and test their research, real-
time, in the classroom. Similarly, deeper connections with companies could be helpful in the MBA
Program (e.g., sourcing and placing students, serving as field immersion sites) and Doctoral
Programs (e.g., serving as dissertation research sites).

Too Close to Practice?

For all the ways closer engagement with companies would benefit the School and its faculty, there
were risks to consider as well.

One of the School's early custom clients in Executive Education, for example, was the Royal Bank
of Scotland. Throughout the early 2000s, many of the School's faculty—including Nitin—were
engaged in developing cases and designing a curriculum for a leadership development program, and
then in teaching the firm's senior executives. When RBS collapsed in 2008, inevitable questions arose
as to whether the School could have anticipated or prevented the downfall.

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"I've reflected on this for many hours," noted Nitin, "because I remember the heat the School took
for Enron, too. Yes, an HBS MBA was at the helm, but our involvement with the organization had
been primarily through case writing. We certainly took a reputational hit in that case. Would it have
been greater if they were an HBS leadership development partner? Is reputational damage just
inevitable, whether our relationship is with an individual or the institution? Are there lessons we can
learn from law, accounting, and management consulting firms that face similar challenges?"

Academic integrity was another important consideration. The longstanding practice of allowing
companies to sign off on cases before they could be released led the School's detractors to assert that
the cases faculty members wrote were already biased as a result. Would an enterprise learning
initiative exacerbate these concerns? Nitin noted, "the phrase 'conflict of interest' presumes that
relationships between researchers and companies are inherently bad. But HBS, from its founding,
has stressed that we want our faculty to learn from and ultimately influence business practice; we
view this engagement as a virtuous cycle. Can we manage this tension—stay close to practice and
maintain academic integrity?"

Navigating the Path Forward

David thought about the questions he'd like to raise with the BDA. They included:

• Should the School more intentionally pursue enterprise learning?

• If so, how should the School define success in this new arena? Throughout its history and
across its programs, HBS promised a "transformational educational experience"—
particularly, transformation of an individual. What would transformation mean in the
context of a company?

• Should the School define criteria for companies with which it would—and would not—
engage? Whether in admitting students to its degree programs or hiring new faculty or staff
members, HBS was highly selective. Should it carry this same philosophy into enterprise
learning?

He looked forward to what he knew would be a dynamic discussion.

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Exhibit 1 Harvard Business Publishing

$ millions 1998 2008 2014 2015 2016 2017

Revenue $72 $144 $202 $209 $222 $228
Contribution $16 $15 $30 $31 $31 $33
Margin 22% 10% 15% 15% 14% 14%
FTEs – 273 373 398 423 441

HBP Revenue Components by Market-Facing Group ($ millions)

HBP Revenue Components by Product Line (2017 $ millions)

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Exhibit 2 Executive Education

$ millions 1998 2008 2014 2015 2016 2017

Revenue $53 $106 $164 $170 $177 $193
Contribution $51 $57 $60
Program Weeks 174 245 264 269 264 278
FTEs – 104 133 140 144 141

Executive Education Participants by Program Type

Executive Education Revenues by Program Type ($ millions)

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Exhibit 3 HBX

HBX B2B and B2C Participants, CORe and Courses, Launch Through FY17

HBX FY17 Revenue Components ($ thousands)

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Exhibit 4 Top Clients across Executive Education, HBP, and HBX

Executive Education
HBX
Open Enrollment Programs HBP
(FY17)
(FY15-FY17)
Access Bank PLC American Express Company AB InBev
Deloitte Touche Tohmatsu Limited Amgen Inc. Accenture
Ernst & Young Global Ltd. AT&T Inc. BlackRock
Federal Republic of Nigeria Capital Group Companies, Inc. Bloomberg Philanthropies
General Electric Company Citigroup Inc. Center for Advanced Data
Sciences
Google Inc. Coca-Cola Company Danaher Corporation
Government of Australia Dow Chemical Company Koc Holding
Government of Saudi Arabia Fannie Mae Mexichem
Government of the U.S. Goldman Sachs Group, Inc. Uber Technologies
Henkel AG & Co. KGaA HCA Inc.
Hindustan Petroleum Corporation International Game Technology
Ltd.
Investec plc Johnson & Johnson
Johnson & Johnson Morgan Stanley
KPMG Nokia Corporation
Kuwait Oil Company K.S.C. Six Continents Limited
Medtronic, Inc. State Farm Mutual Automobile
Insurance Company
Microsoft Corporation Statoil ASA
Mitsubishi Corporation Synchrony Financial
PricewaterhouseCoopers LLP Thomson Reuters Corporation
Siemens AG Vanguard Group, Inc.
Executive Education
Custom Programs
(FY17)
Bacardi Ltd.
Chief Executives Organization
Coca-Cola Company
HNA Group
InnovationsFonden
Kaiser Permanente
Novartis AG
Qatar Leadership Center
VW China
Young Presidents Organization

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Exhibit 5 Competitors in the Enterprise Learning Market

Traditional

Corporate
New
Competitors& Universities
Partnerships

Ascending
Newcomers