NEWSLINE - Fall 1999

Corporate Universities Emerge as Pioneers in Market-Driven Education

1999 Survey of Corporate University Future Directions
The following report is excerpted with permission from "Corporate Universities International," the newsletter of Corporate University Xchange, Inc., a New York-based corporate education and research firm.

Corporate University Xchange recently completed its "1999 Survey of Corporate University Future Directions," a study of 120 best practice corporate universities. The deans of these organizations were surveyed and the top-line findings are detailed below. The figures are as revealing as the multitude of stories emerging from the corporate world that point to the ascendancy of education that is strategically aligned with business goals.

Learning has traditionally been the job of the nation's more than 3,700 institutions of higher education—where graduation signifies the end of formal learning and work the beginning of the "real world." But it now appears this paradigm is giving way to a new model of learning where work and learning are blending together into one seamless activity (see Figure 2).

The Growth of Corporate Universities
By the early 1980s, there were 400 corporate universities in the U.S. The real growth occurred, however, in the 1990s, when that number increased sharply to 1,600, including 40 percent of Fortune 500 companies. Assuming the current pace of growth, the number of corporate universities will exceed the number of traditional universities by the year 2010, if not sooner.

"Increasingly, working adults want the same type of service from their educational provider that they currently receive from their bank or super- market—convenience, accessibility and 24-hour service," said Jeanne C. Meister, founder of Corporate University Xchange, Inc. "For working adults, busy schedules, inflexible course schedules and the lack of convenient, accessible educational offerings are major barriers to continuing their education." Just as one-stop financial shopping delivers convenient and accessible products and services to consumers, corporations now are providing a similar level and type of service to the education market as they implement satellite-delivered learning to the corporate classroom and Web-based college courses to the employee's desktop.

"This has major implications for traditional universities," said Meister. "In fact, some are responding to the changing dynamics of the education marketplace by creating their own for-profit education firms to supply corporations with accredited courseware." The recently launched NYUonline is one market-driven alternative to the education programs developed by corporations, she said. Other models adopted by universities—and encouraged, even economically supported by corporations—to develop market-driven education are proliferating. These models include:

• Multistate educational broker. A prime example is Georgia Online, a consortium of 10 schools in Georgia's university system.
• Regional university broker. Examples include the Western Governors University and the California Virtual University
• University/Business partnership. Examples of this abound, including Daimler-Chrysler/USC, a partnership that uses distance learning to transcend limitations of time and space.

Run the Training Department As a Business
Corporations are recognizing the need for their training department to perform to the standards of their business units, including crafting a mix of products and services that provide value to customers. To this end, companies are starting to employ the same tools used in their business units to forecast the type and level of learning needed to meet the strategic goals of the business. Consider General Motors University's use of a process—derived from the method GM uses to determine product demand—to forecast the specific learning requirements for the organization.

"A growing number of senior business leaders are committed to a funding model that demands that the corporate university demonstrate a clear linkage between services rendered and customer needs," said Meister. "This is being put into place through the use of a pay-for-services funding model requiring business units to pay for the services delivered by their corporate university, rather than a straight corporate allocation."

Involve Leaders As Teachers
The survey found that corporate universities increasingly are involving their CEOs and senior management in the learning process. The survey found that CEOs are showing support for their corporate universities in a variety of ways. More than 30 percent of the corporate university deans surveyed indicated their CEO teaches a course or actively sponsors specific learning interventions. These CEO-sponsored courses range from Michael Dell's (Dell Computer Corp.) online "Know the Net" course to Jack Smith's (GM) instructor-led "Lessons in Leadership Through General Motors' History." Also, the CEOs of more than 80 percent of the companies surveyed mention the corporate university in speeches, and 60 percent of the companies mention it in their annual reports. "This points to the importance these organizations ascribe to the corporate university as a competitive advantage and a point of distinction in the marketplace," said Meister.

Experiment in Developing Innovative Partnerships With Institutions of Higher Education
Corporations are strengthening their commitment to education by developing partnerships with institutions of higher education. The survey found that more than 62 percent of corporate universities have alliances with four-year colleges. By the year 2003, this is expected to increase to 85 percent. "In the new millennium, we will see an increase in partnerships among corporate universities and the executive education units of business schools, as well as with distance learning vendors and professional trade associations," said Meister.

The large increase in partnerships with education units within international business schools is a possible consequence of the impact of globalization on training, especially regarding multinational organizations. The increase in partnerships with distance learning vendors points to the growing importance of technology in learning. Additionally, 60 percent of the corporate universities surveyed are partnering with institutions of higher education to offer degree programs that emphasize skills needed for the new millennium, such as Andersen Consulting and The University of Texas' new MBA focusing on customer insight—the use of customer feedback to drive the design and manufacturing process.

Use Technology to Accelerate As Well As to Manage Learning
Technology is an integral part of the learning process and is used not only to deliver learning but also to manage the back office of the education function. A growing number of the 120 corporate university deans surveyed indicated that the chief information officer and the chief learning officer are increasingly working together to design, develop and implement education programs.

Among the corporate university deans surveyed, 64 percent currently deliver less than 20 percent of their education and training via technology. By the year 2003, they estimate that up to 75 percent of their education will be delivered by one of five key technologies: intranets, satellites, the Internet, video conferencing and CD-ROMs. The use of distance learning, streaming video (downloaded real time video), the Internet and direct satellite to home technologies is expected to become a more important factor in learning delivery by the year 2003. This growth parallels the increasing innovation and accessibility of these sophisticated systems.

Measure the Value of Your Investment in Education
Corporate university deans are researching ways to calculate the return on investment of education. Measurement models are focusing on linking the investment in education to increases in employee satisfaction/ retention, employee productivity, and market share increases. Corporations committed to strategic learning and to running their training department as a business are assessing such areas as: the efficiency of their course registration process, instructional design cycle time, instructor certification and vendor management.

Major themes that emerge from the survey indicate steady growth for corporate universities and a further refining of the processes and procedures that define their role in spearheading strategic education.

The complete findings of the "1999 Survey of Corporate University Future Directions" is available from Corporate University Xchange. For more information, call (800) 946-1210 or visit the Corporate University Xchange Web site: www.corpu.com.