Agile Partnering:
Managing Volatile Markets in Traditional Industries
More than ever, university-based executive education is expected to provide corporate leaders with industry-specific, flexible-delivery, high-impact experiences, which requires capabilities that stretch beyond the traditional teaching models of business school faculty. But the best solution for most exec ed units should be to shrink their core unit, and expand their ability to partner with specialty providers. This may sound obvious and straight-forward for other industries, but the execution of this model runs counter to the traditional activity and culture of business schools. For 2022, I thought I would begin with a series of articles on my research/thoughts/experience with what I believe to be a new skill/requirement of my peers; the partnering expert. (I use this example of an industry with which I have significant personal experience, but believe the model is valuable more broadly, and will try to present it as a useful skill for professionals in many traditional industries.)
After 25 years in academia, I have begun to recognize the culture’s influence on my own cognitive ‘scripts’. For years (circa 2004–6) I fervently argued with my friend Tony O’Driscoll (author of Learning in 3D) about the evolving role of technology in learning. A leading researcher and expert on technology-supported learning, Tony was enthusiastic about a model he was helping build at IBM, moving the learning process from learning-in-place (training) to on-demand learning. The new model would offer an expert system that helped individuals source the specific knowledge required to solve a problem from a well-defined resource network; a Google-like service (before Google was an available service) for a variety of internal management and business challenges.
As a learning professional myself, I hated the idea at the time as (from my perspective) Tony’s approach meant learning was out, information/solution sourcing was in. For me there was too much of a trade-off from leaders developing their personal expertise (long-term value), to simply solving the current problem (short-term benefit). (Tony, as just one of his effective counters to my concerns, would point out that successfully solving today’s problem was an expertise; a particularly valuable one.) Twenty years later I have trouble remembering the context we were living in then, and what my former self was fighting for as today on-demand insights from experts are critical to complementing/challenging our own instincts. For many years we trained and valued experience-based decision-making, knowing it took too longer to gather sufficient data to guide leaders’ decisions. Today, we make sure leaders understand the rapidly changing world creates unique challenges, and decisions will benefit from data analytics and web-based information that is critical in expanding a leader’s knowledge beyond their limited experience (ie. IBM Watson’s influence in medicine).
The learning on-demand model, I believe, is also an effective depiction of the behavior required today by leaders in traditional industries (like academia) to serve increasingly volatile and diverse markets. The alternative is a business environment I feel I’ve been living for more than 5 years, best defined as constantly chasing rabbits down a series of holes as we respond to unique business opportunities by expanding the internal capabilities. With each new opportunity we were stretched to build technology platforms, add technical expertise, learn how to deliver specialized topics, etc. Each opportunity was chased as a potential long-term return on investment with our new capabilities. We were repeating a cultural model for traditionally long-term oriented industries in a market that no longer fit that model.
In the early years of my executive education career, I was fortunate to work with Bill Davidson (author of 2020 Vision and Breakthrough). Bill’s guidance to future leaders leaned on both his academic research and consulting experience, primarily in helping executives understand their organizational models and drivers at a deeper, more fundamental level. One of my favorite topics was exploring the strategic, organizational and personal orientations of companies and how this was significantly influenced by the development time and lifecycle of new products/services. Companies with short product development/lifecycles (less than 3 years; ex. tech companies) are typically defined by practices and behaviors that support a fast-changing market. Longer development/lifecycle companies (more than 3 years; ex. pharma, energy, and academia) operate in a model that serves more stable markets and support large capital investments. Each organization’s business model/culture is reflected in the company’s preferred organizational structures, staffing, decision-making, investment strategy, leader development, compensation … basically every system is influenced by its model/culture or ‘dominant logic’, and the culture will reward leader behaviors that align with the model.
A good example of how Bill’s framework benefited his training of developing leaders can be seen in a discussion I had with a young high-potential participant from an energy company. The participant was in one of his first supervisory roles and selected to attend the company’s leadership program by a manager that saw great potential in him. During the opening session, he approached me wanting to discuss a frustration he had recently experienced. He explained being turned down by his manager when he proposed a multi-million-dollar project opportunity. I asked him how much the company would make in year two. He said, proudly, all the money would be made in the first year. Ah. We discussed Bill’s model of large investment, long-term return organizations who will often resist drawing away resources for short-term projects, no matter their returns, as the organization’s resources were focused on major investments that would produce on-going returns for many years. Senior decision-makers, both consciously and unconsciously, see most investments not aligned with the standard model as risky and it is important to be aware of this influence when going against the model.
Upon reflection, our unit was making the same error. By looking at each client demand as an opportunity to expand our capability to deliver something new we were expecting the business school to value our investment in a new service offering. No matter how valuable this might appear in year one or two, long-term it was a distraction from the core model. There was no possibility of rationally convincing school leaders of the benefits that would be received (financial, reputation, market relationships). We were challenging the decision process of where and how investments were made in a long-term business model, and increasingly the likelihood of roller-coaster financial returns.
(For my friends, I will add that I believe in today’s market we would both be wrong. The executive education unit should not make significant investments outside the traditional model, AND business schools need to recognize the business model is moving to a shorter lifecycle return on investments, and all the implications this shift entails. But I’ll explore further the implications for business schools of this shorter lifecycle in a later article.)
One of the specific differences Bill’s model addresses is how long-term and short-term business models approach partner relationships. For a long-term oriented business, extensive research is done before finding a technology partner, since that relationship will also be a long-term integration in a product/service offering. Short-term oriented businesses recognize that the product will not last long, and many relationships can only last as long as the product. He describes the different partnering models as vertical integration (building long-term relationships with organizations in the value chain) and virtual integration (building relationships as required to add needed expertise), respectively. The virtual model rewards relationships that can quickly provide value, but just as quickly be terminated when the product is cannibalized. I’m re-defining the virtual model for executive education as Agile Partnering.
Another comparison between long-term and short-term models in Bill’s framework is the number of investments made in new products. Long-term companies spend considerable time and energy to research and launch a few large bets on new products. Short-term companies will make a number of small bets, which they will test market, find which have the strongest appeal, and quickly invest in development and roll-out. Neither strategy is wrong; but in a rapidly changing market with shorter product lifecycles, small bets supported by Agile Partnering reduce the investment risk and allow for quicker market adaptation. This approach also should smooth out the variability in annual returns; something that is also highly valued in academia.
Our market today is fortunate to have many service providers that can be sourced to offer specific capabilities in testing new offerings. By shrinking the core model to strategically align with the business school/university’s strengths and brand we can limit the financial and organizational commitments to resources that will provide long-term support, and free up capital for short-term relationships to serve dynamic market demands. Another valuable reason for this approach is most significant growth, from my experience, is not from strategically planned investments but rather from having resources to quickly respond when large return opportunities present themselves (HBR article ‘First Mover or Fast Follower’, June 2012). In academia, in order not to make investment errors, new products go through a lengthy development and review process that includes numerous committees, faculty councils and school/university level decision-makers. A 2–3 year development cycle is not unusual.
The challenge with this Agile Partnering model, in addition to running counter to the traditional academic model, is it requires a new skill set of unit leaders. Over the past two decades, as the client-specific custom-designed program has grown in popularity, we have seen executive education leader skill sets require improved expertise assessing, interpreting, designing and managing many unique client relationships. Add to this list today a need for expertise in/understanding of educational technology and contract negotiating. As bad as the error long-term investment of internal resources to new opportunities is, a much worse error being made is long-term contracting with external partners due to a lack of understanding of technology tools, how much value they truly offer and the likely lifecycle of that specific relationship. The dynamic, short-term nature of client relationships requires the same virtual relationship flexibility pursued by many technology companies. Otherwise, today’s innovative partner may be tomorrow’s drag on market responsiveness and financial returns.
In addition to improving the unit’s capabilities while limiting long-term financial commitments, Agile Partnering also allows your core team to focus their efforts on managing the client relationship. Having to add/replace clients is a major investment, and particularly challenging for schools whose brand is strongest in a small region. The increased ability to serve multiple client needs, primarily with the support of diverse service partners, will help grow the strength and depth of each client relationship without having to shift your small team’s focus.
Finally, Agile Partnering offers a less disruptive approach to market adaptation in the long-term business model, and therefore more accepting to long-term industry leaders. As Chris Fussell presents in One Mission: How Leaders Build a Team of Teams, organizational agility is an innovative leadership model that provides historically strong hierarchies (ie. military) improved flexibility and responsiveness without having to disrupt the fundamental structure. Similarly, Agile Partnering allows executive education units (and business schools as a whole) increased market and client responsiveness without challenging the traditional academic structure.
Of course there is a trade-off to the benefits of Agile Partnering. Short-term contracts with external partners tend to be more expensive and a significant impact on profit margins, both per program and annual totals. (Similar to comparing the cost of a full-time employee’s time to contracting externally for that work; contracting is more expensive for a single event, less expensive if there is insufficient demand over a longer period to support the cost of a full-time person.) In order to justify the impact on margins, unit leaders must have a firm understanding of their resource expenditures (staffing, faculty time, development time, opportunity costs, etc) in the traditional model, to determine if the partnership in addition to contributing necessary expertise is providing either the ability to increase program revenues or a savings on resources. A short cut I used was to look at each new activity from a full-cost standpoint (20% business development, 10% material development, 10% design, 30% content delivery expertise, 10% program delivery, etc). In this way I could evaluate if the contracted partnership cost (applied across each program) could be equated to a positive financial contribution.
Agile Partnering, though, should not be seen through a financial lens only. The strategic value is of critical importance, improving the school’s ability to serve a diverse and dynamic market while focusing riskier long-term investments on core activities. My previous article, Business Schools — Sustainable Innovation thru Internal Collaboration, also suggests a change to the traditional model that increases the ability to leverage partnerships by applying them across both non-degree and degree programs, further improving the likelihood of a positive return on the relationships.
Agile Partnering is both a strategy and skill set, requiring innovative team models and new leader capabilities. While cognitively the model might make sense, are you prepared to implement the change in your organization? I’ll share research/thoughts/experiences with specific behaviors and techniques in developing stronger partnership skills over the next few weeks: how to build and test new products, to reduce upfront investments and identify strong potential new products; what lessons learned from creating and managing EdTech partnerships can help you prepare for your next partnership; how does Agile Partnering both align with and positively influence the overall Business School; given the core team’s focus on managing the client, and the need to justify that resource investment, what steps can you take to build a stronger, deeper client relationship.
Looking back 20 years, I can see how my instincts failed to understand the changing nature of leader decision-making. Inevitably we will have similar reflections in the future but do we have enough data now to predict or at least challenge ourselves to consider the education market requires a new logic?
Dan McGurrin, PhD
Dr. Daniel (Dan) McGurrin recently completed a 25-year university-based career working with HR and Business Leaders to develop learning activities aligned with strategic initiatives. Today, Dan is continuing this work as a consultant and trainer.
