Issue link: https://www.e-digitaleditions.com/i/438743
34 BizEd JANUARY | FEBRUARY 2015 LESSON NO. 1: GET THE CURRICULUM RIGHT FIRST— THEN DETERMINE HOW TO PAY FOR IT. Prior to its reinvention, our MBA pro- gram was completely unsustainable. We admitted about 120 students per year to our two-year full-time MBA program, for which government-regulated annual tu- ition and fees were less than CAN$2,500 (about US$2,198—no, that is not a typo). We received an additional $7,000 gov- ernment subsidy per full-time student per year. However, it cost us approxi- mately $20,000 per student to deliver the program, which meant that we lost nearly $10,000 each year for every MBA student we admitted. The government would not allow a substantial tuition increase due to a powerful student lobby and strong public opposition to higher tuition rates. By my estimate, the optimal class size for our MBA program was zero. Some- thing had to change. First, we launched an Executive MBA in partnership with HEC Montre- al to show that the local market would pay for a premium program. Delivered in French and English and based on Henry Mintzberg 's managerial mind- sets, the program recently graduated its fifth class. It served as a springboard for what we ultimately would do with our full-time MBA. Next, we launched a new MBA curriculum under the existing govern- ment-subsidized $2,500 tuition rate. We asked faculty, students, and alumni to help develop a new curriculum for the full-time MBA, without regard to resource constraints—we wanted them to be creative, unbound by what we couldn't afford to do. Based on their feedback, we designed a curriculum based on "integrated management," which relies on a streamlined core that teaches across functions. We also introduced mandatory internships and international trips, developed more professional development activities, and reduced the number of program concentrations. It was risky to roll out these programs without a funding model to support them, but we needed to prove to the uni- versity what we could accomplish with more resources. LESSON NO. 2: BE PREPARED TO MAKE TOUGH DECISIONS. To mitigate our losses from an under- funded program, we reduced the size of the first full-time MBA class that enrolled in the new program, from 120 down to about 60. This tough choice paid off in improved student satisfac- tion and job placement results. We also chose to suspend admissions to our fragmented part-time program. We did this to focus our attention on our new direction and make the idea of exiting the market a reality. LESSON NO. 3: KNOW THAT "NO" CAN BE NECESSARY TO GET TO "YES." We, along with university partners, lobbied government for greater freedom in our MBA tuition models. But while THE FINANCIAL MAKEOVER BUSINESS SCHOOLS MUST BE BOLD YET REALISTIC, PATIENT YET PERSISTENT, AND CREATIVE YET FOCUSED ON THE PATH TO FINANCIAL INDEPENDENCE. BY PETER TODD change management s dean of the desautels faculty of management at mcgill university in Montreal, I often was accused of being "resource obsessed." But business school leaders, especially those at public universities, have to be preoccu- pied with managing change and adopting alternative financial strategies. As governments continue to cut funding for higher education, new dollars—especially dollars that don't compromise program quality or cost 99 cents each to obtain—have become increasingly hard to come by. At Desautels, we have had to transform our programs while simultaneously changing our income models. We have diversified our revenue sources, decreasing the portion our budget derived from government funding from approximately 75 percent to about 25 percent, and we have doubled our modest operating budget from approximately CAN$20 million to $40 million per year. Perhaps most important, we have done so while reducing the number of students that we teach and increasing the number of professors who teach them. We now invest more in the experience of each student. We have a richer intellectual and scholarly environment, more satisfied students, and more involved alumni. In our most significant initiative, we redesigned, repositioned, and privatized our MBA program—a move that we believe will pay us the greatest dividends over time. We also expanded our executive education offerings, raised tuition in select areas, and formed partnerships in new geographical markets, so that if one strategy failed, we would have alternative paths to success. We complemented these efforts with major fundraising and alumni engagement initiatives. Throughout this process, we've learned 11 important lessons that could guide other schools seeking out alternative funding models. A