BUSINESS_____________________________________________________ gt H_uman _~ita__ ____cap___

Raising capital the human kind Lebanons EMBA programs are growing but no one knows what value they add By Thomas Schellen

M anaging a top flight

business school program

in Beirut is like enjoying

Forrest Gumps box of chocolates Its

a life full of surprises where many

- but not all - are happy ones The

latest proof in the pudding was the

American University of Beiruts intake

of Executive MBA (EMBA) students

exactly a year ago

Recalling an experience that

still burns in his memory Riad

Dimechkie the executive director

of the EMBA program at AUBs

Olayan School of Business (OSB) was

expecting a class of 22 managers and

professionals from around the region

to embark on their EM BAs

They had applied been vetted and

accepted he explains And said they

were coming Then one week before

the start date [United States President

Barack) Obama was planning to

bomb Damascus So we lost half our

students in one week

In statistical terms over the

duration of the AUB EMBA program

since its inauguration 10 years

70 SEPTEMBER 2014 I wvwexeculive-mogozinecom

ago the unexpected drop in 2013

enrollment because of the sudden

elevation in security risk makes a

small but noticeable dent lowering

the average potential class size by

about one person for each calendar

year given that OSB statistics say the

program had 233 participants and 210

graduates from 16 intakes since 2004

with the 17th intake this summer

These totals are strikingly

diminutive whether seen by

themselves or when compared with

top name global providers such as

Paris based INSEAD where almost

200 EMBA students enrolled across

three locations in 2013 alone or on

a yet wider scale with a 10 year crop

of conventional MBA students at

Harvard in the United States where

cumulative class size from 2004 to

2013 was 9022

But according to Dimechkie the

headcount of OSBs EMBA enrollment

is perSistently small because it is

supposed to be The ideal size for

me is about 18 to 20 participants [per

class] and the next one [intake 17) is

probably going to be around 20 he

says We usually have two to three

times the number of applicants for

every participant that we accept and

of those whom we accept depending

on the times we usually see 90

percent enroll

Against the exceptional dip in the

2013 intake numbers the 90 percent

enrollment potentially suggests an

affirmative message on the validity

of the schools EMBA program when

one considers not only the political

and security circumstances but also

what the program comprises A certal

rate of cancellations is a given for a

program that demands participants to

invest upwards of 1200 hours of hard

intellectual and emotional labor over

one and a half years plus 700 hours of

class attendance and in plenty of cases

many weekends spent away from home - and all that on top of often still

carrying a workload in a company

At the Ecole Superieure des Affaires (ESA) which is situated

only a short walk away from the

AUB campus in Beiruts Hamra

district the message is also one of

an exuberant rationale for executive

education There is a huge demand

for EMBAs and other executive

education varieties in the Middle

East says Camille Moussa the

director of executive education at

the Lebanese-French ESA Huge

corporate entities [in the Middle

East] have told me We are in

desperate need Companies are more

and more becoming aware of their

need [for executive education] in

markets that I have seen and been

able to identify

ESAs EMBA program features

classes that are a bit larger - about

40 per cohort versus the 18 to 20

which Dimechkie names as his ideal

size - and baseline tuition costs of

$28800 look almost socialist when

BUSINESS gt Human capital

compared with AUBs $55650 (or

the six figure tuition at the worlds

priciest EMBA programs)

Those differences may go a good

way to explain why ESAs EMBA

according to its marketing manager

Cheryllvlatar experienced actually

an inverse effect of increased student

demand from the regional crisis shy

she says a growing number of recent

applicants came from Syria and were

motivated by having to acquire new

skills after their economic base at

home fell victim to the vicious conf1ict

over the countrys future

GROWTH IN CORPORATE TRAINING

AUB and ESA are both among

a small group of tertiary educatIOn

providers that spearheaded the

creation of EMBA programs in the

Middle East and North Africa and

also were pioneers in proliferating

other leadership training and skill

transfer programs for corporate and

individual managerial clients which

are subsumed under the header of

executive education

Internationally the main two

divisions of executive education

are tailored programs and mostly

short-burst open programs The

former are designed and delivered

to organizational clients such as

corporations and institutions while

the latter are offered to all qualified

business practitioners as intensive

72 SEPTEMBER 2014 I 0v execulive-mogozine com

studies that most commonly involve

on-campus program attendance

between two days and a week but

can also mean longer or online

programs Broken down to per

day costs attendance fees for a top

shelf open program are commonly

well above $1000 and a week long

immersion experience into something

like Columbia Business Schools

Emerging Leader Development

Program comes not much cheaper

than buying a small new Chevy or Kia

at the dealer nearest to the campus

This entire bracket of advanced

education has developed greatly over

relatively few years since business

schools in the US first started offering

MBA degrees for working executives

- the EMBA - in the 1980s Other

executive education portfolios

advanced from being offered as the

last centurys community-oriented

sidebar projects to becoming

corporate clientele focused programs

of core reputational and financial

importance for their providers

Recently the immense need

for executive programs has been

penetrating every corner of the global

THE DEMAND FOR EXECUTIVE

EDUCATION IS VERY HIGH AND AWARENESS IS INCREASING A LOT

economy as demonstrated not only

by an increasing launch of satellite

programs from top providers - for

example INSEAD which started its

own EMBA program in Fontainebleau

near Paris in 2003 has since added

location offerings in Beijing Abu

Dhabi and Singapore - but also

by development of more and more

regional and local programs by

universities and also commercial

providers in Asia the Middle East

Africa and Latin America

One explanation for this trend is

the depreciation of knowledge in the

worlds fast-changing technological

scientific and economic environment

Your academic degree expires after a

few years and that is why you have to

keep educating yourself argues Imad

Zbib executive director in charge

of OSBs consulting and executive

education activities and a colleague

of Dimechkie This need has been

realized also by a growing number of

companies both in the Gulf region

and the Levant The demand for

executive education is very high and

awareness is increasing a lot he tells

EXECUTIVE adding that a top tier

of Arab corporations are becoming

clearer and clearer in formulating

their training needs and have recently

asked for specific new programs

on subjects such as innovation

experiential team building and

managing corporate change

HEDGING PRODUCTIVITY Besides individual and corporate

responses to market needs and

competitive pressures and beyond

desires to improve attractiveness and

performance of organizations the

growth of executive education seems

existentially linked also to the rise

of human capital as the knowledge

economys profit engine

The appreciation of human capital

first entered a new trajectory in the

aftermath of World War II when Ted

Schultz an American economist of

agrarian upbringing attributed the

fast post-war recovery of European

BUSINESS gt Human cap ~------------------------------------------------------------------~--

countries to the capital of knowledge and skill that working men and women could invest into these ravaged economies

Laborers have become cap italists not from a diffusion of the ownership of corporation stocks as folklore would have it but from the acquisition of knowledge and skill that have economic value Schultz told the American Economic Association in 1960

Ever since the human capital element in the economy has been two things it has been understood as a crucial ingredient for productivity and economic development and its value has alternatively been sought affirmed ideologically struggled over or denied perhaps because of the heritage of predatory thinking in business and (economic and corporate) politics

This debate notwithstanding the top Lebanese business schools experience of seeing growing demand for executive education and the willingness of Arab corporations to invest into replenishment of their human capital and development of their knowledge leaders appears undeniable

Corroboration of this demand growth experience from an external vantage point comes from an international business school that has a history of interacting with the region Corporate interest in tailored programs has developed greatly in the yea rs after the Midd le East was affected by the global financia l crisis wi th some time delay around 2009 says Hischam El-Agamy an executive director at IMD a Swiss business school that is at the top of the Financial Times list of providers of open programs

El-Agamy Nho among other duties heads IMDs outreach to the Middle East and Africa tells EXECUTIVE that up until about 10 years ago regional interest in executive education originated

74 SEPTEMBER 2014 I wwwexecutlVemagazlne cam

mainly from individuals seeking to advance their personal career opportunities In his observation Arab corporate interest in executive programs beginning from the early 2000s was mainly for the purpose of rewarding and retaining top employees Bu t in the past fo ur to five years he witnessed how companies in the Middle East and North Africa started to pursue invest ments in their human cap it al fo r the sake of their organizational development

He says For this transformation journey they wanted three things first [to develop] a pool of talent that supported the transformation second they wanted specific leaders who can manage this transformation and third they wanted to stimulate creation of a competitive culture

PENETRATION OF THE MARKET HAS BEEN GROWING WELL BUT I AM NEVER SATISFIED AND THEREFORE IT IS NOW TIME TO TAKE IT TO THE REGION

in their organization a culture of awarding and accountability and a sense of urgency

NO POWERPOINT BULIMIA According to ESAs Moussa great

market potentials for selling training and human capital development programs all around the region have also been found by global media and information firm Thomson Reuters with which ESA is collaborating to offer training programs in the Middle East and North Africa

Moreover Moussa says ESA has been able to cultivate a domestic niche with trans- Lebanese and trans-regional potential in executive education because of the business schools ability to meet regulator mandated training needs for employees in the Lebanese

financial sector This gives the impression that simply put ES- t s

developed programs in co ll aborallo~

with the central bank which the Ian ~

then requires of bankers A huge aspect of our executi C

education is development of the banking sector where we are very deeply involved in providing qualifications and training for employees Moussa explains This training is required for banking employees by the Lebanese central bank as regulator and ESA has developed a portfolio of programs iil collaboration with the central bank spann ing topics from anti-mo neyshylaundering to risk The courses have been lucrative wi th delivery of about 2000 teaching hours per year he estimates annuall y reaching approxi mately 10 percent of the sector workforce Including repeat participants he en thuses 1 would S2

about 2000 to 2500 bankers per year come through the school and it has been like that effectively since 2010

Development of such programs according to Moussa is very time consuming and a new set of courses on retail banking and credit analysis will be offered from Janua ry 2015 after 30 months of development As these new qualifications come into the market a new group of bank employees will be mandated to acqUire them and be certified he says adding that ESAs engagement with the sec tor has created doors of partnerships on customized training with many banks for the school as well as recen t opportunities to provide consulting and eventually programs to regulators outside Penetration of the market has been growing well but I am never satisfied and therefore it is now time to take it to the region he tells EXECUTIVE

GROWING MINDS While ESA and OSB appear to

have their niches there have been growing sim ilarities on the practical

BUSINESS ~L____________________________________________________gt Human ~ ita____~__caLp___

side as both EMBA programs

presently apply a weekend schedule

for classes and deliver content in

English as the default language

ESA switched to this model four

years ago Practical relevancy of

all their education offerings and

responsiveness to market demand

were other key emphases espoused by

the executive education directors at

both schools

In their EMBA programs ESA

and OSB also still attract firstly

Lebanese participants residing in

country or abroad According to ESAs

Matar 60 percent of EMBA enro llees

are local 30 percen t are Lebanese

living abroad and 10 percent are

foreign nationals mainly from other

countries in the region According to

Dimechkie the OSB EMBA attracts 75

percent Lebanese of which over a third

live outside the country 23 percent

other Arabs and 2 percent non-Arabs

As far as OSBs executive

education 60 to 70 percent of

program delivery takes place outside

ofLebanon according to Zbib This is

driven in part by the sizeable training

budgets of large organizations in the

Gulf Cooperation Council but also

76 1SEPTEMBER 2014 I M1W8X8cuI1V8-magazmecam

by political circumstances Many

clients used to always come here but

now we are going to them he says

adding that regional corporations

appreciate the academic flavor that

the presentation of programs by OSB

faculty infuses into the trainings

Nonetheless Lebanese companies

are an important demand source for

executive education according to

Salim Chahine the acting dean of

OSB I think Lebanese organizations

are as aware as large regional

organizations about the importance

and relevancy of training They are

selective [in choosing providers] but

I dont think they have small training

budgets he tells EXECUTIVE

The somewhat uneven

distribution of demand for executive

education between regional and

local companies alludes however

to an anomaly in Lebanons position

in human capital development

In an inaugural report seeking to

THE IMPRESSION I FORMED OF THE MBA EXPERIENCE WAS THAT IT INVOLVED TAKING TWO YEARS OUT OF YOUR LIFE AND GOING DEEPLY INTO DEBT

measure human capital endowment

in the worlds countries the World

Economic Forum last year ranked

Lebanon overall in the lower middle

field 74th of 122 nations and at a

position commensurate with general

development indicators for the

country But in one of the rankings

four pillars - education - Lebanon

ranked not only 42 places higher

but it also was by far the one country

of all 122 with the highest upward

digression in the field of education

from its overa ll rank

SHARING THE CHOCOLATES While the directors homepages

and marketing materials not only

of AUB ESA and IMD but of every

executive education provider from

large to small and from super-price

to almost affordable trumpeted the

superb benefi ts that their programs

provide and while all business school

executives in our conversations

emphasized with conviction that

their programs are practice driven

hands on custom tailored and deephmiddot

invested in aligning the local culture

and specific Middle Eastern vi rtues ana

values with the content and delivery ot

programs some questions remain

The high potential in the Lebanese

executive education sector can be

confirmed from the way in which

the OSB and ESA programs have not

only attracted participants and found

loyal corporate clients However other

than being presented with participant

testimonials and anecdotes no

probing could produce answers to

the most interesting questions such

as what quantifiable positive impacts

companies see that buy a tailored

program or dispatch employees to

enroll in an EMBA degree

The answers are probably as

elusive as the quest to uncover how

the human capital development

and the distribution of wealth can

move globally from a recently highly

documented dichotomy to a more

amenable symbiosis or something

approaching mutual prosperity

development

But it is refreshing to know that

OSBs Dimechkie recommends his

visitors to read Matthew Stewart an

American business author who wrote

in one piece for The Atlantic The

impression I formed of the MBA

experience was that it involved taking

two years out of your life and going

deeply into debt all for the sake of

learning how to keep a straight face

while using phrases like o ut-of-theshy

box thinking win-win situation and

co re competencies

When eating a box of chocolates

be ready for surprises and dare to

stay humble [I

BUSINESS gt Human cap ~------------------------------------------------------------------~--

countries to the capital of knowledge and skill that working men and women could invest into these ravaged economies

Laborers have become cap italists not from a diffusion of the ownership of corporation stocks as folklore would have it but from the acquisition of knowledge and skill that have economic value Schultz told the American Economic Association in 1960

Ever since the human capital element in the economy has been two things it has been understood as a crucial ingredient for productivity and economic development and its value has alternatively been sought affirmed ideologically struggled over or denied perhaps because of the heritage of predatory thinking in business and (economic and corporate) politics

This debate notwithstanding the top Lebanese business schools experience of seeing growing demand for executive education and the willingness of Arab corporations to invest into replenishment of their human capital and development of their knowledge leaders appears undeniable

Corroboration of this demand growth experience from an external vantage point comes from an international business school that has a history of interacting with the region Corporate interest in tailored programs has developed greatly in the yea rs after the Midd le East was affected by the global financia l crisis wi th some time delay around 2009 says Hischam El-Agamy an executive director at IMD a Swiss business school that is at the top of the Financial Times list of providers of open programs

El-Agamy Nho among other duties heads IMDs outreach to the Middle East and Africa tells EXECUTIVE that up until about 10 years ago regional interest in executive education originated

74 SEPTEMBER 2014 I wwwexecutlVemagazlne cam

mainly from individuals seeking to advance their personal career opportunities In his observation Arab corporate interest in executive programs beginning from the early 2000s was mainly for the purpose of rewarding and retaining top employees Bu t in the past fo ur to five years he witnessed how companies in the Middle East and North Africa started to pursue invest ments in their human cap it al fo r the sake of their organizational development

He says For this transformation journey they wanted three things first [to develop] a pool of talent that supported the transformation second they wanted specific leaders who can manage this transformation and third they wanted to stimulate creation of a competitive culture

PENETRATION OF THE MARKET HAS BEEN GROWING WELL BUT I AM NEVER SATISFIED AND THEREFORE IT IS NOW TIME TO TAKE IT TO THE REGION

in their organization a culture of awarding and accountability and a sense of urgency

NO POWERPOINT BULIMIA According to ESAs Moussa great

market potentials for selling training and human capital development programs all around the region have also been found by global media and information firm Thomson Reuters with which ESA is collaborating to offer training programs in the Middle East and North Africa

Moreover Moussa says ESA has been able to cultivate a domestic niche with trans- Lebanese and trans-regional potential in executive education because of the business schools ability to meet regulator mandated training needs for employees in the Lebanese

financial sector This gives the impression that simply put ES- t s

developed programs in co ll aborallo~

with the central bank which the Ian ~

then requires of bankers A huge aspect of our executi C

education is development of the banking sector where we are very deeply involved in providing qualifications and training for employees Moussa explains This training is required for banking employees by the Lebanese central bank as regulator and ESA has developed a portfolio of programs iil collaboration with the central bank spann ing topics from anti-mo neyshylaundering to risk The courses have been lucrative wi th delivery of about 2000 teaching hours per year he estimates annuall y reaching approxi mately 10 percent of the sector workforce Including repeat participants he en thuses 1 would S2

about 2000 to 2500 bankers per year come through the school and it has been like that effectively since 2010

Development of such programs according to Moussa is very time consuming and a new set of courses on retail banking and credit analysis will be offered from Janua ry 2015 after 30 months of development As these new qualifications come into the market a new group of bank employees will be mandated to acqUire them and be certified he says adding that ESAs engagement with the sec tor has created doors of partnerships on customized training with many banks for the school as well as recen t opportunities to provide consulting and eventually programs to regulators outside Penetration of the market has been growing well but I am never satisfied and therefore it is now time to take it to the region he tells EXECUTIVE

GROWING MINDS While ESA and OSB appear to

have their niches there have been growing sim ilarities on the practical

BUSINESS ~L____________________________________________________gt Human ~ ita____~__caLp___

side as both EMBA programs

presently apply a weekend schedule

for classes and deliver content in

English as the default language

ESA switched to this model four

years ago Practical relevancy of

all their education offerings and

responsiveness to market demand

were other key emphases espoused by

the executive education directors at

both schools

In their EMBA programs ESA

and OSB also still attract firstly

Lebanese participants residing in

country or abroad According to ESAs

Matar 60 percent of EMBA enro llees

are local 30 percen t are Lebanese

living abroad and 10 percent are

foreign nationals mainly from other

countries in the region According to

Dimechkie the OSB EMBA attracts 75

percent Lebanese of which over a third

live outside the country 23 percent

other Arabs and 2 percent non-Arabs

As far as OSBs executive

education 60 to 70 percent of

program delivery takes place outside

ofLebanon according to Zbib This is

driven in part by the sizeable training

budgets of large organizations in the

Gulf Cooperation Council but also

76 1SEPTEMBER 2014 I M1W8X8cuI1V8-magazmecam

by political circumstances Many

clients used to always come here but

now we are going to them he says

adding that regional corporations

appreciate the academic flavor that

the presentation of programs by OSB

faculty infuses into the trainings

Nonetheless Lebanese companies

are an important demand source for

executive education according to

Salim Chahine the acting dean of

OSB I think Lebanese organizations

are as aware as large regional

organizations about the importance

and relevancy of training They are

selective [in choosing providers] but

I dont think they have small training

budgets he tells EXECUTIVE

The somewhat uneven

distribution of demand for executive

education between regional and

local companies alludes however

to an anomaly in Lebanons position

in human capital development

In an inaugural report seeking to

THE IMPRESSION I FORMED OF THE MBA EXPERIENCE WAS THAT IT INVOLVED TAKING TWO YEARS OUT OF YOUR LIFE AND GOING DEEPLY INTO DEBT

measure human capital endowment

in the worlds countries the World

Economic Forum last year ranked

Lebanon overall in the lower middle

field 74th of 122 nations and at a

position commensurate with general

development indicators for the

country But in one of the rankings

four pillars - education - Lebanon

ranked not only 42 places higher

but it also was by far the one country

of all 122 with the highest upward

digression in the field of education

from its overa ll rank

SHARING THE CHOCOLATES While the directors homepages

and marketing materials not only

of AUB ESA and IMD but of every

executive education provider from

large to small and from super-price

to almost affordable trumpeted the

superb benefi ts that their programs

provide and while all business school

executives in our conversations

emphasized with conviction that

their programs are practice driven

hands on custom tailored and deephmiddot

invested in aligning the local culture

and specific Middle Eastern vi rtues ana

values with the content and delivery ot

programs some questions remain

The high potential in the Lebanese

executive education sector can be

confirmed from the way in which

the OSB and ESA programs have not

only attracted participants and found

loyal corporate clients However other

than being presented with participant

testimonials and anecdotes no

probing could produce answers to

the most interesting questions such

as what quantifiable positive impacts

companies see that buy a tailored

program or dispatch employees to

enroll in an EMBA degree

The answers are probably as

elusive as the quest to uncover how

the human capital development

and the distribution of wealth can

move globally from a recently highly

documented dichotomy to a more

amenable symbiosis or something

approaching mutual prosperity

development

But it is refreshing to know that

OSBs Dimechkie recommends his

visitors to read Matthew Stewart an

American business author who wrote

in one piece for The Atlantic The

impression I formed of the MBA

experience was that it involved taking

two years out of your life and going

deeply into debt all for the sake of

learning how to keep a straight face

while using phrases like o ut-of-theshy

box thinking win-win situation and

co re competencies

When eating a box of chocolates

be ready for surprises and dare to

stay humble [I

BUSINESS ~L____________________________________________________gt Human ~ ita____~__caLp___

side as both EMBA programs

presently apply a weekend schedule

for classes and deliver content in

English as the default language

ESA switched to this model four

years ago Practical relevancy of

all their education offerings and

responsiveness to market demand

were other key emphases espoused by

the executive education directors at

both schools

In their EMBA programs ESA

and OSB also still attract firstly

Lebanese participants residing in

country or abroad According to ESAs

Matar 60 percent of EMBA enro llees

are local 30 percen t are Lebanese

living abroad and 10 percent are

foreign nationals mainly from other

countries in the region According to

Dimechkie the OSB EMBA attracts 75

percent Lebanese of which over a third

live outside the country 23 percent

other Arabs and 2 percent non-Arabs

As far as OSBs executive

education 60 to 70 percent of

program delivery takes place outside

ofLebanon according to Zbib This is

driven in part by the sizeable training

budgets of large organizations in the

Gulf Cooperation Council but also

76 1SEPTEMBER 2014 I M1W8X8cuI1V8-magazmecam

by political circumstances Many

clients used to always come here but

now we are going to them he says

adding that regional corporations

appreciate the academic flavor that

the presentation of programs by OSB

faculty infuses into the trainings

Nonetheless Lebanese companies

are an important demand source for

executive education according to

Salim Chahine the acting dean of

OSB I think Lebanese organizations

are as aware as large regional

organizations about the importance

and relevancy of training They are

selective [in choosing providers] but

I dont think they have small training

budgets he tells EXECUTIVE

The somewhat uneven

distribution of demand for executive

education between regional and

local companies alludes however

to an anomaly in Lebanons position

in human capital development

In an inaugural report seeking to

THE IMPRESSION I FORMED OF THE MBA EXPERIENCE WAS THAT IT INVOLVED TAKING TWO YEARS OUT OF YOUR LIFE AND GOING DEEPLY INTO DEBT

measure human capital endowment

in the worlds countries the World

Economic Forum last year ranked

Lebanon overall in the lower middle

field 74th of 122 nations and at a

position commensurate with general

development indicators for the

country But in one of the rankings

four pillars - education - Lebanon

ranked not only 42 places higher

but it also was by far the one country

of all 122 with the highest upward

digression in the field of education

from its overa ll rank

SHARING THE CHOCOLATES While the directors homepages

and marketing materials not only

of AUB ESA and IMD but of every

executive education provider from

large to small and from super-price

to almost affordable trumpeted the

superb benefi ts that their programs

provide and while all business school

executives in our conversations

emphasized with conviction that

their programs are practice driven

hands on custom tailored and deephmiddot

invested in aligning the local culture

and specific Middle Eastern vi rtues ana

values with the content and delivery ot

programs some questions remain

The high potential in the Lebanese

executive education sector can be

confirmed from the way in which

the OSB and ESA programs have not

only attracted participants and found

loyal corporate clients However other

than being presented with participant

testimonials and anecdotes no

probing could produce answers to

the most interesting questions such

as what quantifiable positive impacts

companies see that buy a tailored

program or dispatch employees to

enroll in an EMBA degree

The answers are probably as

elusive as the quest to uncover how

the human capital development

and the distribution of wealth can

move globally from a recently highly

documented dichotomy to a more

amenable symbiosis or something

approaching mutual prosperity

development

But it is refreshing to know that

OSBs Dimechkie recommends his

visitors to read Matthew Stewart an

American business author who wrote

in one piece for The Atlantic The

impression I formed of the MBA

experience was that it involved taking

two years out of your life and going

deeply into debt all for the sake of

learning how to keep a straight face

while using phrases like o ut-of-theshy

box thinking win-win situation and

co re competencies

When eating a box of chocolates

be ready for surprises and dare to

stay humble [I