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Effective Practices

IMD: A Different Kind of Business School

At first glance, the International Institute for Management Development (IMD) in Lausanne, Switzerland, appears to be a typical top business school. It operates a strong MBA program, offers a wide array of executive education courses and churns out reams of new research each year.

Dig a little deeper, though, and it becomes quite clear that IMD is far from typical. The school has abandoned faculty hierarchy (you’ll find no assistant or associate professors at IMD) and the tenure system—time-honored traditions at most institutions of higher education. And, unlike the majority of b-schools, IMD actually makes money.

In 2002—a year when many business schools around the world were struggling financially—IMD generated a net profit of approximately U.S. $4.5 million on overall revenue of about U.S. $70 million. “We are totally self-financed,” says IMD President Peter Lorange. “We accept no government money. We have no debt. We are very healthy.”

Lorange, who has been at the helm of IMD since 1993, takes pride in his school’s financial health—as well as in IMD’s reputation for breaking the rules. In fact, he credits doing things differently—and running IMD more as a business than as a traditional business school—as the fuel driving his organization’s growth. “We are doing better than ever,” he says. “That has to do with the fact that we have a very modern portfolio of programs that are highly relevant for today’s companies and their success.”

IMD is reveling in its own success these days. With more than 900 applicants vying for one of only 90 spots in the school’s MBA program, IMD is one of the most exclusive b-schools in the world. It’s also one of the most expensive, charging U.S. $50,000 in tuition and fees for its 10-month MBA program.

In its 2002 ranking of full-time MBA programs, BusinessWeek rated IMD the third best b-school outside the United States, behind the European Institute of Business Administration (INSEAD) and Queen’s University. Coming in at number 21, IMD was the highest-ranked international b-school in the Wall Street Journal/Harris Interactive 2003 survey of corporate recruiters.

The school’s broad array of open and customized executive education courses—which generate more than 80 percent of IMD’s annual revenues—are highly regarded and sought after, as well. In its 2002 Executive Education Survey, the Financial Times ranked IMD number six worldwide and number one in Europe in executive education. The survey rated IMD number two worldwide in customized programs.

Practical Value

With the motto “real world, real learning,” IMD’s goal is to provide its students and executive education participants with research and classroom lessons steeped in relevance. “We are obsessed with practice,” says Sean Meehan, IMD’s MBA program director and the Martin Hilti Professor of Marketing and Change Management. “Working with real managers on real issues is the dominant thing that goes on here.”

This obsession with practice is perhaps most obvious in IMD’s executive education offerings. The school recently launched a new suite of “action learning” programs that enable companies to send teams of executives to study specific issues affecting their businesses and industries. 

Not surprisingly, IMD’s focus on relevance is what attracts many busy executives to its programs. “They deliver what they promise,” says David Carnes, vice president of global purchasing at Norske Skog in Norway and a 2001 graduate of IMD’s executive MBA program. “Because the projects you work on come from your own company, you come out of the program with a much better understanding of your industry and business. [It’s like] using your own company as a laboratory.”

IMD is careful not to operate in a vacuum. In fact, Lorange says the school is able to stay relevant by giving its 150 corporate learning partners a voice in designing the school’s research initiatives and coursework. It does this by bringing together representatives from these companies several times a year to discuss the most pressing business issues facing industry today. “The companies that work with us are our research partners,” Meehan says. “A lot of what we do is live thinking and learning.”

Doing away with tenure and professorial titles has also helped IMD to stay tapped in to the real world of business. “Our clients want to work with brains,” Lorange says. “They don’t care if these brains are young or old. They care that they are relevant.”

Because remaining relevant is so important to IMD and its bottom line, faculty members must perform or their contracts are not renewed. “Our faculty is our most important resource, but they must be engaged in teaching that generates money—otherwise they would be a drain,” Lorange says. “If our faculty members are not billable because they are slacking off or are no longer doing cutting-edge research and thinking, they will be asked to leave.”

Carnes says the absence of tenure at IMD keeps its faculty members responsive to students and corporations. “It puts them on the same footing as their students, who are all exposed to a competitive job market,” the IMD alumnus says.

Given IMD’s focus on practice, it’s not surprising that veteran business executives teach alongside the school’s lifelong academics. “You get real-world people here,” says Lino DiCuollo, a former attorney who enrolled in IMD’s MBA program in January. DiCuollo points to Bill George, professor of leadership and governance at IMD and former CEO and chairman of Medtronic, as a case in point. “Bill George is a very reputable business man,” DiCuollo says. “He brings the perspective of running a huge multinational corporation to the classroom.”

Although some of the research performed by IMD’s professors “is less academic in nature and form,” Carnes says he has found the work to provide “powerful, practical advice.” As an example, Carnes cites IMD professor Jacques Horovitz’s latest book, The Seven Secrets of Service Strategy (Financial Times Prentice Hall, 2000). This “is a simple, practical, brilliant book,” Carnes says.

In an effort to keep its alumni and corporate partners feeling connected, IMD provides early access to the school’s new research and ideas through weekly Webcasts. “We have more than 6,000 active executives from Tokyo to [Los Angeles] logging in every week,” Lorange says. IMD also hosts what it calls “discovery events,” which bring alumni and other executives together for several days to delve into the school’s latest research findings.

Small and Elite

IMD was created in 1990 through a merger of the corporate universities IMI (started by Alcan in Geneva) and Imede (founded by Nestle in Lausanne). A strong connection to industry has been part of the school’s foundation since its inception.

Along with maintaining and fostering IMD’s corporate connections, Lorange is focused on keeping IMD small and highly elite. That’s one reason the school refuses to increase the size of its MBA program—even though doing so would bring more money into IMD’s coffers.

By remaining small, Meehan says, IMD is able to do such things as take its entire MBA class to Bosnia and Herzegovina to study the challenges facing business in a postwar country. “When you do things like that, you can’t have a mass-market program of 800 or 1,000 students,” Meehan says.

Although it means he will have access to a smaller network of MBA alumni once he graduates, DiCuollo says he appreciates being part of a close-knit group of people who come from diverse backgrounds and industries. “With only 90 participants, you get to know everyone well,” DiCuollo says. “Because my peers have an average of seven or eight years of work experience, I can learn as much from them as from the professors.”

Keeping its MBA program small also enables IMD to cram what is typically taught over the course of two years into 10 months.

While the shortened program is a draw to many students unwilling to forego two years of work experience to earn their MBAs, it also means students are under intense pressure from the day they walk in the door. “You are busy from morning to night,” DiCuollo says. “If you want to maximize your leisure time, this is not the place to come.”

With its MBA students hailing from more than 40 different nationalities, IMD is one of the most international business schools in the world. Yet, despite its strong reputation in Europe and other parts of the world, IMD remains relatively unknown in the United States. (Only about 11 percent of its MBA students come from North America.)

Lorange is working to increase the school’s exposure in the United States by “dramatically increasing” its U.S. advertising and placing three full-time sales representatives throughout the United States. He also established a partnership last year with the Massachusetts Institute of Technology’s Sloan School of Management to deliver executive education programs.

“The fact that Sloan has an exclusive agreement with us has directly strengthened our brand in the U.S.,” says Lorange, who taught at Sloan for nine years.

All of these efforts are part of Lorange’s plan to keep IMD growing in stature and reputation and, perhaps most important, operating in the black. After all, as Meehan points out, “We have to make our numbers, or we go out of business.”

—Carlotta Mast

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