Managing a top flight business school program in Beirut is like enjoying Forrest Gump’s box of chocolates. It’s a life full of surprises where many — but not all — are happy ones. The latest proof in the pudding was the American University of Beirut’s intake of Executive MBA (EMBA) students exactly a year ago.
Recalling an experience that still burns in his memory, Riad Dimechkie, the executive director of the EMBA program at AUB’s Olayan School of Business (OSB), was expecting a class of 22 managers and professionals from around the region to embark on their EMBAs.
They had applied, been vetted and accepted, he explains, “And said they were coming. Then, one week before the start date, [United States President Barack] Obama was planning to bomb Damascus. So we lost half our students in one week.”
In statistical terms over the duration of the AUB EMBA program since its inauguration 10 years ago, the unexpected drop in 2013 enrollment because of the sudden elevation in security risk makes a small but noticeable dent, lowering the average potential class size by about one person for each calendar year, given that OSB statistics say the program had 233 participants and 210 graduates from 16 intakes since 2004, with the 17th intake this summer.
These totals are strikingly diminutive, whether seen by themselves or when compared with top name global providers such as Paris based INSEAD, where almost 200 EMBA students enrolled across three locations in 2013 alone, or, on a yet wider scale, with a 10 year crop of conventional MBA students at Harvard in the United States, where cumulative class size from 2004 to 2013 was 9,022.
But according to Dimechkie, the headcount of OSB’s EMBA enrollment is persistently small because it is supposed to be. “The ideal size for me is about 18 to 20 participants [per class] and the next one [intake 17] is probably going to be around 20,” he says. “We usually have two to three times the number of applicants for every participant that we accept and of those whom we accept, depending on the times, we usually see 90 percent enroll.”
Against the exceptional dip in the 2013 intake numbers, the 90 percent enrollment potentially suggests an affirmative message on the validity of the school’s EMBA program when one considers not only the political and security circumstances but also what the program comprises. A certain rate of cancellations is a given for a program that demands participants to invest upwards of 1,200 hours of hard intellectual and emotional labor over one and a half years, plus 700 hours of class attendance and, in plenty of cases, many weekends spent away from home — and all that on top of often still carrying a workload in a company.
At the École Supérieure des Affaires (ESA), which is situated only a short walk away from the AUB campus in Beirut’s Hamra district, the message is also one of an exuberant rationale for executive education. There is a “huge demand” for EMBAs and other executive education varieties in the Middle East, says Camille Moussa, the director of executive education at the Lebanese–French ESA. “Huge corporate entities [in the Middle East] have told me, ‘We are in desperate need.’ Companies are more and more becoming aware of their need [for executive education] in markets that I have seen and been able to identify.”
ESA’s EMBA program features classes that are a bit larger — about 40 per cohort versus the 18 to 20 which Dimechkie names as his ideal size — and baseline tuition costs of $28,800 look almost socialist when compared with AUB’s $55,650 (or the six figure tuition at the world’s priciest EMBA programs).
Those differences may go a good way to explain why ESA’s EMBA, according to its marketing manager Cheryl Matar, experienced actually an inverse effect of increased student demand from the regional crisis — she says a growing number of recent applicants came from Syria and were motivated by having to acquire new skills after their economic base at home fell victim to the vicious conflict over the country’s future.
Growth in corporate training
AUB and ESA are both among a small group of tertiary education providers that spearheaded the creation of EMBA programs in the Middle East and North Africa and also were pioneers in proliferating other leadership training and skill transfer programs for corporate and individual managerial clients, which are subsumed under the header of executive education.
Internationally, the main two divisions of executive education are tailored programs and, mostly short-burst, open programs. The former are designed and delivered to organizational clients, such as corporations and institutions, while the latter are offered to all qualified business practitioners as intensive studies that most commonly involve on-campus program attendance between two days and a week but can also mean longer or online programs. Broken down to per day costs, attendance fees for a top shelf open program are commonly well above $1,000 and a week long immersion experience into something like Columbia Business School’s “Emerging Leader Development Program” comes not much cheaper than buying a small new Chevy or Kia at the dealer nearest to the campus.
This entire bracket of advanced education has developed greatly over relatively few years since business schools in the US first started offering MBA degrees for working executives — the EMBA — in the 1980s. Other executive education portfolios advanced from being offered as the last century’s community-oriented sidebar projects to becoming corporate clientele focused programs of core reputational and financial importance for their providers.
Recently, the immense need for executive programs has been penetrating every corner of the global economy, as demonstrated not only by an increasing launch of satellite programs from top providers — for example, INSEAD, which started its own EMBA program in Fontainebleau near Paris in 2003, has since added location offerings in Beijing, Abu Dhabi and Singapore — but also by development of more and more regional and local programs by universities and also commercial providers in Asia, the Middle East, Africa and Latin America.
One explanation for this trend is the depreciation of knowledge in the world’s fast-changing technological, scientific and economic environment. “Your academic degree expires after a few years, and that is why you have to keep educating yourself,” argues Imad Zbib, executive director in charge of OSB’s consulting and executive education activities and a colleague of Dimechkie. This need has been realized also by a growing number of companies both in the Gulf region and the Levant. “The demand for executive education is very high and awareness is increasing a lot,” he tells Executive, adding that a top tier of Arab corporations are becoming clearer and clearer in formulating their training needs and have recently asked for specific new programs on subjects such as innovation, experiential team building and managing corporate change.
Besides individual and corporate responses to market needs and competitive pressures, and beyond desires to improve attractiveness and performance of organizations, the growth of executive education seems existentially linked also to the rise of human capital as the knowledge economy’s profit engine.
The appreciation of human capital first entered a new trajectory in the aftermath of World War II when Ted Schultz, an American economist of agrarian upbringing, attributed the fast post-war recovery of European countries to the capital of “knowledge and skill” that working men and women could invest into these ravaged economies.
“Laborers have become capitalists not from a diffusion of the ownership of corporation stocks, as folklore would have it, but from the acquisition of knowledge and skill that have economic value,” Schultz told the American Economic Association in 1960.
Ever since, the human capital element in the economy has been two things: it has been understood as a crucial ingredient for productivity and economic development, and its value has alternatively been sought, affirmed, ideologically struggled over, or denied, perhaps because of the heritage of predatory thinking in business and (economic and corporate) politics.
This debate notwithstanding, the top Lebanese business schools’ experience of seeing growing demand for executive education and the willingness of Arab corporations to invest into replenishment of their human capital and development of their knowledge leaders appears undeniable.
Corroboration of this demand growth experience from an external vantage point comes from an international business school that has a history of interacting with the region. Corporate interest in tailored programs has developed greatly in the years after the Middle East was affected by the global financial crisis with some time delay around 2009, says Hischam El-Agamy, an executive director at IMD, a Swiss business school that is at the top of the Financial Times’ list of providers of open programs.
El-Agamy, who among other duties heads IMD’s outreach to the Middle East and Africa, tells Executive that up until about 10 years ago, regional interest in executive education originated mainly from individuals seeking to advance their personal career opportunities. In his observation, Arab corporate interest in executive programs beginning from the early 2000s was mainly for the purpose of rewarding and retaining top employees. But in the past four to five years he witnessed how companies in the Middle East and North Africa started to pursue investments in their human capital for the sake of their organizational development.
He says, “For this transformation journey, they wanted three things: first, [to develop] a pool of talent that supported the transformation; second, they wanted specific leaders who can manage this transformation; and third, they wanted to stimulate creation of a competitive culture in their organization, a culture of awarding and accountability, and a sense of urgency.”
No PowerPoint Bulimia
According to ESA’s Moussa, great market potentials for selling training and human capital development programs all around the region have also been found by global media and information firm Thomson Reuters, with which ESA is collaborating to offer training programs in the Middle East and North Africa.
Moreover, Moussa says, ESA has been able to cultivate a domestic niche with trans-Lebanese and trans-regional potential in executive education because of the business school’s ability to meet regulator mandated training needs for employees in the Lebanese financial sector. This gives the impression that, simply put, ESA has developed programs in collaboration with the central bank which the latter then requires of bankers.
“A huge aspect of our executive education is development of the banking sector, where we are very deeply involved in providing qualifications and training for employees,” Moussa explains. This training is required for banking employees by the Lebanese central bank as regulator, and ESA has developed a portfolio of programs in collaboration with the central bank spanning topics from anti-money-laundering to risk. The courses have been lucrative, with delivery of about 2,000 teaching hours per year, he estimates, annually reaching approximately 10 percent of the sector workforce. Including repeat participants, he enthuses, “I would say about 2,000 to 2,500 bankers per year come through the school and it has been like that effectively since 2010.”
Development of such programs, according to Moussa, is very time consuming and a new set of courses on retail banking and credit analysis will be offered from January 2015 after 30 months of development. As these new qualifications come into the market, a new group of bank employees will be mandated to acquire them and be certified, he says, adding that ESA’s engagement with the sector has “created doors of partnerships on customized training with many banks” for the school as well as recent opportunities to provide consulting and eventually programs to regulators outside. “Penetration of the market has been growing well but I am never satisfied, and therefore it is now time to take it to the region,” he tells Executive.
While ESA and OSB appear to have their niches, there have been growing similarities on the practical side as both EMBA programs presently apply a weekend schedule for classes and deliver content in English as the default language. ESA switched to this model four years ago. Practical relevancy of all their education offerings and responsiveness to market demand were other key emphases espoused by the executive education directors at both schools.
In their EMBA programs, ESA and OSB also still attract firstly Lebanese participants, residing in country or abroad. According to ESA’s Matar, 60 percent of EMBA enrollees are local, 30 percent are Lebanese living abroad and 10 percent are foreign nationals, mainly from other countries in the region. According to Dimechkie, the OSB EMBA attracts 75 percent Lebanese, of which over a third live outside the country, 23 percent other Arabs and 2 percent non-Arabs.
As far as OSB’s executive education, 60 to 70 percent of program delivery takes place outside of Lebanon according to Zbib. This is driven in part by the sizeable training budgets of large organizations in the Gulf Cooperation Council but also by political circumstances. “Many clients used to always come here, but now we are going to them,” he says, adding that regional corporations appreciate the “academic flavor” that the presentation of programs by OSB faculty infuses into the trainings.
Nonetheless, Lebanese companies are an important demand source for executive education according to Salim Chahine, the acting dean of OSB. “I think Lebanese organizations are as aware as large regional organizations about the importance and relevancy of training. They are selective [in choosing providers] but I don’t think they have small training budgets,” he tells Executive.
The somewhat uneven distribution of demand for executive education between regional and local companies alludes, however, to an anomaly in Lebanon’s position in human capital development. In an inaugural report seeking to measure human capital endowment in the world’s countries, the World Economic Forum last year ranked Lebanon overall in the lower middle field, 74th of 122 nations and at a position commensurate with general development indicators for the country. But in one of the ranking’s four pillars — education — Lebanon ranked not only 42 places higher, but it also was by far the one country of all 122 with the highest upward digression in the field of education from its overall rank.
Sharing the chocolates
While the directors, homepages and marketing materials not only of AUB, ESA and IMD but of every executive education provider from large to small and from super-pricey to almost affordable trumpeted the superb benefits that their programs provide, and while all business school executives in our conversations emphasized with conviction that their programs are practice driven, hands on, custom tailored and deeply invested in aligning the local culture and specific Middle Eastern virtues and values with the content and delivery of programs, some questions remain.
The high potential in the Lebanese executive education sector can be confirmed from the way in which the OSB and ESA programs have not only attracted participants and found loyal corporate clients. However, other than being presented with participant testimonials and anecdotes, no probing could produce answers to the most interesting questions such as what quantifiable positive impacts companies see that buy a tailored program or dispatch employees to enroll in an EMBA degree.
The answers are probably as elusive as the quest to uncover how the human capital development and the distribution of wealth can move globally from a recently highly documented dichotomy to a more amenable symbiosis or something approaching mutual prosperity development.
But it is refreshing to know that OSB’s Dimechkie recommends his visitors to read Matthew Stewart, an American business author who wrote in one piece for The Atlantic, “The impression I formed of the MBA experience was that it involved taking two years out of your life and going deeply into debt, all for the sake of learning how to keep a straight face while using phrases like ‘out-of-the-box thinking’, ‘win-win situation’, and ‘core competencies.’”
When eating a box of chocolates, be ready for surprises and dare to stay humble.