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certain group of people. Many of us believe that's better done through selective scholarships than through an across-the-board discount." —Robert Harris, University of Virginia Dolan, on the other hand, has not experienced conflict with the central university. "We haven't said anything like, 'We don't want this many in-state undergraduates,'" he says. "I also think we've convinced people that the BBA program benefits from a strong MBA program. We've been able to communicate to the university that we have a strategy in which all the parts are working together." That's small comfort to another group of state schools who find the real disadvantage to privatization is that they're not able to do it. "Private funds go disproportionately to uni- versities already known for excellence," notes Pirkul of the University of Texas at Dallas. Private funds also are donated by successful alumni, he says, and schools whose students come from a lower socioeconomic background might have few alumni in a position to give a great deal of money. Another type of school that would find it hard to privatize would be a school with a unionized faculty, says Frank. "If a finance professor and a French literature professor make the same amount, you can't expect that business school to pros- per in the upper echelons," he says. This means that state schools that aren't able to make the leap to greater independence will find it harder than ever to compete with the best schools. "Schools that don't have an alumni base with enough success or a long enough heritage to help them out will be struggling to provide a quality edu- cation," says Harris of Darden. "So will schools where polit- ical reasons keep them from raising more private funds. I do worry about that gap." Pirkul believes that what ultimately will separate public and private schools—or elite public schools and public schools with fewer resources—is the ability to do research. As finan- cial support decreases, the resource gap between schools will relegate small, regional schools to being teaching institutions in the shadow of larger national research universities. "In the long run," says Pirkul, "that does have an effect on the qual- ity of the education students will receive." Making the Leap Despite such concerns, these deans believe it's inevitable that more state schools will begin to pursue a private funding model. "Considering the way states are funded and society's appetite for tax cuts, I'm not sure any major change will take place in the funding of higher education," Pirkul says. "If you don't tax people to support higher education, they are going to have to pay for it." For business schools that do want to move from a more public to a more private model, these deans recommend five essential steps. Develop a strategy. Start with a carefully thought-out finan- cialmodel.Harris suggests, "Sit down and ask, 'What kind of endowment do I need, what kind of tuition do I have to charge, how much money do I have to raise each year, how muchmoney in scholarships do I need to offer to get students at this higher rate?'" Alutto of the Fisher School points out that schools have to understand which programs make money, which ones don't, and which ones they're going to keep even if they're not prof- itable. "If you haven't defined your core values, then you can get in big trouble," he warns. Work collaboratively. To succeed at the new model, you'll need "the support of the political apparatus that surrounds the public university," says Harris. He adds, "If it comes down to a fight, I don't think it works. There has to be a shared understanding of why itmakes sense for the public and for the school. The change requires support from alumni, political forces, and university administrators. You've got to build some coalitions." Build a strong management team. Frank structured his team slowly during his first few years as dean. "Once the team is in place, you'll have a very collegial set of department chairs," he says. If this group is full of entrepreneurially-minded people, so much the better. "My role has gone from being the one who creates new programs and ideas to being the one who makes sure there's enough energy behind the great ideas coming from many different places," he says. Keep control of the money. Not only should the business school keep most of the funds it raises for itself, but the dean should be the one who decides what to do with it, Frank believes. "The finance department doesn't own the money it uses. That's owned by the dean's office," says Frank. "That's tremendously important when it comes to optimizing resources. While I don't do it frequently, I can move money in and out of a department." Remember your roots. Even though the Darden School has gone toward amodel ofmore private funding,Harris is quick to point out that the school has not split off from the univer- sity. "We're still proud to be part of the University of Virginia," he says. "We still partnerwith other schools around the university. Our students are still University of Virginia graduates, and I still report to the president." As competition increases for the best teachers and the best students, business schools worldwide must refine their pro- grams, define their niches, and align their priorities. Those who want to compete at the highest levels will be looking for ways to fund their ascension—andmost will be taking the pri- vate route up an increasingly elite mountain. ■ z BizEd MARCH/APRIL 2005 29