Rivals’ growth and consolidation challenge business schools

Executives looking to upgrade their skills and knowledge are no longer faced with a limited choice of traditional academic courses. A wave of new entrants is shaking up the executive education market, which had been considered a cash cow for business schools for decades.

This shift comes as the worldwide market for corporate training grows in value and competitiveness. Rival providers now have their sights set on a rich reward: according to the Global Corporate Training Market report, by consulting firm SkyQuest, the sector was valued at $164bn last year and is forecast to grow to $487bn by 2031.  

This growth is fuelling intense competition, as reflected in a survey of 1,100 employers from about 35 countries conducted by education consultants CarringtonCrisp. The poll found that, these days, only 35 per cent of organisations use business schools for learning and development. Far more popular are online learning providers (used by 57 per cent of employers); private training companies (cited by 51 per cent); professional trade bodies (49 per cent); consulting firms (43 per cent); and in-house services (42 per cent).

Why the reluctance to engage with business schools? One in five employers told CarringtonCrisp they do not use the institutions because they “are too theoretical”, while 23 per cent said they are too expensive.

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Andrew Crisp, owner of CarringtonCrisp, says: “Employers still tend to see schools as out of touch with the real world. When they are used, their flexibility, wide range of content, and ability to work across all levels of leadership are highlighted.”

In this fragmented training market, consolidation is accelerating. In March, consulting firm Accenture agreed to acquire Udacity, an online learning company, putting it into more direct competition with business schools. Accenture LearnVantage, as the business is now called, offers a range of programmes in areas such as data analytics and artificial intelligence. 

Kishore Durg, global lead of Accenture LearnVantage, says the purchase was driven by a desire to help clients reskill and upskill their people, particularly as generative artificial intelligence shakes up the global workforce. “We want to ensure our clients’ talent pool doesn’t get left out,” Durg says. LearnVantage uses conventional AI to assess the capabilities of individual learners and recommend relevant courses from a large selection.

Accenture said it will invest $1bn in the business over the next three years, aiming to bring assessments, content and learning platforms into a cohesive package for its clients. Durg likens the approach to assembling Lego bricks: “We are streamlining and disrupting a fragmented market.” 

However, he sees business schools as friends rather than foes, highlighting partnerships with institutions such as MIT and Stanford. “We do see competition, but we’re offering a larger umbrella of services to our clients,” explains Durg. “We’re also offering scale. They ask, can we help them train 5,000 people in Prague, or 10,000 in India?” 

It is not the first time newcomers have combined forces. In 2021, US education technology company 2U acquired its rival EdX for $800mn, creating a global education network with 83mn learners and 4,500 online programmes today.

Anant Agarwal, chief academic officer at 2U, insists business schools are not adversaries, noting that the company relies on a network of 260 content partners, including universities, to bring online education to the masses. “What we bring to the table is market reach,” Agarwal says. 

Despite this, challenges persist. Nasdaq-listed 2U has suffered a steep drop in its share price, and has projected a net loss of $98mn-$103mn for 2024. 2U declined to comment on its finances. 

We need to be able to say, with data, that we are truly moving the needle

But Nicholas Hamilton-Archer, chief executive education officer at the University of Michigan’s Ross School of Business, notes the increasing competitiveness of the sector, and underscores the need to demonstrate value to discerning buyers. “I don’t think there’s ever been a moment where it was plain sailing,” he says. 

Michigan Ross, based in the city of Ann Arbor, is focusing on collaboration and global partnerships to extend its reach and impact. Additionally, Hamilton-Archer underscores a shift towards a less transactional approach to executive education — one that aims to demonstrate tangible outcomes to clients. “We need to be able to say, with data, that we are truly moving the needle,” he says. 

Josep Franch, director of Esade Executive Education in Spain, believes that business schools can distinguish themselves in executive education by leveraging research-driven content. He says: “The fact that top business schools have a critical mass of faculty members, who are engaged in research that is advancing the science of management, is what makes us different.” 

Nevertheless, Esade is responding to competition and changing customer demands, by increasing the availability of shorter, skill-specific courses. As people change jobs more frequently and new roles emerge while old ones disappear, Franch sees a greater need for learners to reinvent themselves and acquire new or complementary skills. 

In an expanding executive education market, business schools understand the need to maintain their share of the pie.