First Published in Management Skills & Development magazine

CORPORATE VIEWS OF UNIVERSITY

Stuart Crainer takes a look at the trend for companies to invest in their own universities and asks where their future lies.

With intensifying competition and the lingering effects of corporate downsizing, training budgets remain tight. Consequently, an increasing number of companies are setting up their own management centres, not only to create managers for tomorrow but to add financial value today.

Corporate giants such as NEC, Fiat, AT&T and Motorola offer internal executive training for their managers across the world. Some even open their doors to managers from outside organisations. There appears no stopping the growth of these ‘corporate universities’.

The trend towards do-it-yourself management development is strong-est in the United States where over 1,000 corporate colleges are now operating. They come in all shapes and sizes, and cover virtually every industry. The Ohio automotive-parts manufacturer, Dana Corporation, has Dana University; Ford has a Heavy Truck University in Detroit; Intel runs a university in Santa Clara; Sun Microsystems has Sun U; and Apple has its own university in Cupertino, California.

When they were first established, corporate universities raised a few academic eyebrows. There were sniggers at the thought of McDonald’s Hamburger University or Disney University in Florida (which sports a coat of arms featuring Mickey’s eponymous ears rather than rampant lions and the obligatory Latin motto). The mirth has subsided and suspicion has taken over. Simply, if corporations can train their own executives, the market for business schools is reduced.

The growth in corporate universities can largely be attributed to three things. First, critics of traditional business schools have repeatedly accused them of being too far from the pulse of the business world. It is a widely perceived weakness which corporate universities are keen to capitalise on. In response, many business schools have moved to bring more reality to their programmes, through project-based work, and have developed tailored programmes.

The second impetus behind the growth of corporate universities is the realisation that developing people is key to future survival; something which is too important to be delegated to an external organisation. If the fashionable concept of the learning organisation is to become reality, investment in a corporate university is virtually a prerequisite for success. In the UK, Unipart University has led the way with its commitment to training all employees in wide ranging skills. US research found that companies with their own universities spent 2.5 per cent of payroll on learning - double the US national average.

The third impetus has come from technology. It is notable that many of the corporate universities are based in or about Silicon Valley. Through utilising the latest in technology, companies can economically and effectively deliver distance learning and ‘virtual’ learning. And, crucially, learning can become both continuous and immediate.

The scale of the corporate universities is, in many cases, impressive. Hamburger University, located in Oak Brook, Illinois, may not, in the eyes of some, have a great deal of academic credibility, but it is celebrating its 35th anniversary and boasts over 50,000 graduates. It has 30 resident professors, suggesting that its programmes go a little beyond the art of frying. Indeed, the McDonald’s educational empire has spread in parallel with the growth of its business - there are now ten international training centres in the UK, Japan, Germany and Australia - and technology enables programmes to be delivered simultaneously in 22 languages.

Disney University is similarly successful though its success is built on training managers from external organisations. The Disney approach is simple: Disney is a successful global company with a unique culture; this is how we do it. Basically, Disney University presents its own corporate case study concentrating on corporate culture, motivating and coaching employees, team working and customer service. It has no pretensions to a broader approach, but argues that its success is built on universal managerial skills. As case studies go, it is impressive. Walt Disney World may not be a hallowed hall of academia but it does employ over 40,000 people (‘cast members’ in Disney jargon).

Corporate universities are not for the faint hearted. They are highly expensive. Research in the US by Jeanne Meister calculated that the average operating budget for a corporate university was $12.4 million (though 60 per cent reported budgets of $5 million or less). Typically, National Semiconductor University, opened in 1994, occupies a 22,000 square foot premises with nine classes and room for 430 students. Such facilities - as business schools have been pointing out for years - are costly. Running Intel University cost the company $150 million in 1996 and Intel offers 2,600 courses at which there were 400,000 participants. Little wonder that corporate universities are largely the domain of multinationals.

Corporate universities are not solely an American preserve. IBM has a business school in rural Hampshire and, one of the leaders in the field is GEC’s Dunchurch. In the 1950s, Dunchurch - a mansion in Warwickshire - was home to English Electric apprentices. Now, English Electric is long gone and the apprentices have metamorphosed into executives keen to top up their knowledge of project management, statistical process control and the like. Dunchurch first opened its courses to outsiders in the 1960s. It was thought that there was a danger of becoming too insular and introverted if it was purely a GEC college. Even so, Dunchurch remains part of the GEC empire and its managers still account for over half of its delegates.

The UK’s Civil Service College is also among those open its doors to outsiders. While once the doors of its Sunningdale base were only opened to aspiring civil servants, it now offers over 500 courses, attracting managers from the public and private sectors.

The chief downside of corporate universities has been that they often do not offer anything other than an internal qualification. Mention graduating from Hamburger University in McDonald’s and people are impressed; mention it elsewhere and they are still likely to struggle to keep a straight face. In an effort to broaden their appeal, corporate universities are establishing partnerships with a wide range of organisations. Courses are increasingly affiliated to those of a more traditional academic institution. At National Semiconductor University, for example, people can earn associate’s, bachelor’s or master’s degrees from various universities.

Whether the growth in corporate universities will continue is a matter of some debate - most obviously within business schools. In their review of worldwide executive development, Crafting Competiti-veness, Al Vicere and Robert Fulmer sound a note of caution. ‘While the corporate university movement has to be viewed as a positive affirmation of an organisation’s commitment to life-long learning, a slight danger looms on the horizon,’ note Vicere and Fulmer. ‘The commitment to learning which leads an organisation to establish a corporate university must be carefully monitored, kept flexible, and focused on the strategic imperatives of the sponsoring organisation if maximum benefit from the investment is to be reaped.’

If corporate universities are to succeed in the long-term they must maintain their difference from alternative training providers. Seeking out affiliations and partnerships may be attractive but, in the long-term, may be self-defeating. Hamburger and Harvard would be wise to discard any notions of an unlikely alliance. The more corporate universities resemble traditional universities and business schools, the less their appeal is likely to be.

By Stuart Crainer