Dell Computer Corp. decided last year that its in-house executive training programs weren’t doing enough to teach the financial significance of Dell’s unusual business model. So it went direct — to the Graduate School of Business at the University of Texas (UT) at Austin.
The company and the school formed a partnership, which Dell hoped would provide it with a level of executive education far beyond what was available through less-intimate academic relationships. Working closely with Dell executives based in neighboring Round Rock, UT professors researched the company in depth, then created a two-day finance program detailing the special way liquidity, growth, and earnings must be balanced under the direct-sales model. For one thing, “we show students how capital spending can have a significant impact on the profitability of the business — how if it gets too high it leverages in a negative direction,” says Stan Horner, Dell’s director for executive education. “It reinforces for them why we don’t get away from the direct model.”
The Dell-UT partnership is on the cutting edge of an executive-education trend that is winning many corporate fans these days. Partnerships now can be found at such companies as Amgen, with the University of Southern California; DaimlerChrysler, with Oakland University; Texas Instruments, with UT-Austin; and United Technologies Corp. (UTC), with the University of Virginia. These arrangements go further than popular “customized” courses that many companies arrange with schools for a year or two.
For one thing, these programs are much longer term — often running for five years or more, allowing teacher-executive relationships to build, and becoming part of the human-capital component of a company’s strategic development plan. For another, partnerships work both ways, letting the school benefit, as well, from its deep exposure to the company, and opening up future opportunities in and out of the training realm. Universities develop finance and other cases through the relationship, and can acquaint their business students with executives who have a special tie to the school. In the interactive spirit of the Dell arrangement, for example, CFO Tom Meredith is a guest lecturer for a graduate finance course at UT-Austin.
Educational partnerships also tend to range across a company’s operations, from sales and marketing to production to finance, rather than focusing on a specific training need, as most custom programs do. Still, finance seems to be getting an unusual emphasis in partnering arrangements — both in finance classes for nonfinancial executives trying to familiarize themselves with a company’s approach to finance, and in sessions devoted to training finance officers about their own fast-changing world.
That’s significant, because for years finance has been lagging behind other business areas in executive-education offerings.
Focus on ROIC
In recent years, dissatisfaction with Dell’s old, in-house training was acknowledged even among the instructors. “I would do a presentation and deliver finance ideas, but the word of mouth wasn’t very good,” concedes Chris Schipper, Dell’s regional vice president of finance for Northern Europe, who helped launch the UT partnership. “I could come up with concepts, but I had no way to explain how I arrived at them. It’s important for staffers to know how you got from A to B.”