By Professor Dennis J. Bava, Professor of Management and Principal Researcher at ITESM /CSF
ABSTRACT:
A Strategic Management Model for Establishing a Center for Transnational Leadership and Entrepreneurship at an AAICU Institution
The relentless forces of globalization, cost containment, deregulation, technological change, institutional governance, and the need for growth are driving companies to continually rethink, redesign, and improve their business strategies and processes.
Based on “value added” experience which is multidimensional, this strategic management model serves for launching a Center for Transnational Leadership and Entrepreneurship at an AAICU institution.
The model employs the strategic management paradigm of identifying the principle players in the process; identifying stakeholders; defining goals; analyzing strengths, weaknesses, opportunities, and threats (SWOT analysis); establishing consultancy relationships; and evaluating measurable results.
The Center's unique approach of combining theoretical and practical experience in a range of industries with expertise in various functional areas to help organizations reach their goals is highly valued by clients.
The approach is collaborative, always respectful of the client's insight and experience. Further, this stakeholder approach considers the involvement of the clients' employees as a prerequisite for durable improvements.
MISSION :
Through a Center for Transnational Leadership and Entrepreneurship at an AAICU institution, the spectrum of innovation- the integrated expertise in strategy formation, process improvement, change management, and technology and product development- the Center helps organizations establish a sustainable innovation premium, creating strong financial performance and accelerated growth.
The Center distinguishes itself from competitors by the caliber of industry professionals, academic researchers and honors students, and it draws from the breadth and depth of their collective experience.
The Center is also unique within an AAICU institution in its commitment to helping internal and external clients reinvent their organization, enhance their capacity for learning and change, and create lasting value. When the Center completes an engagement, it leaves behind not only successful ideas, but also a new level of understanding, a more robust and agile organization, and an expanded capacity for learning, changing and growing.
The Center treats its mandates in a holistic way, building a bridge between strategy and implementation. The Center is neutral and independent and prides itself on “developing sustained excellence” by balancing a consideration of an American cultural perspective with the local cultural perspective.
VISION:
The Center for Transnational Leadership and Entrepreneurship at an AAICU institution will be a pre-eminent learner-centered community shaping administrative governance for higher education and business practices for tomorrow's converging global economies.
Convergence
We are living in a period of business and educational revolution, revolution driven by tools and approaches that can have a profound impact on organizational effectiveness and long-term success. It is a time of challenge, but also a time of momentous innovation in how American colleges and universities working in various countries with businesses create and respond to market demands, as well as boost productivity and effectiveness.
How? Through the transparency and rapid deployment of information across traditional functional silos, business processes, communication media, company boundaries and geographic borders. As a result, ideas, functions, products, and processes that have existed separately for centuries are being woven together in many novel ways. In the Center for Transnational Leadership and Entrepreneurship, we call that “convergence.”
Convergence across functions, processes, channels, organizations, industries, media, and markets offers new opportunities for organizational innovation, effectiveness, and competitive advantage. In the Center, faculty and students seek to understand how to create and exploit opportunities for convergence, improve models of leadership, gain competitive advantage, and share that knowledge with the administration and business partners. Convergence is a theme, a core agenda that distinguishes a faculty's research, partnerships with corporations, and the undergraduate and executive academic programs.
Convergence is a business reality. Through the power of information technologies, companies can now reach markets on a global scale; yet foster intimate and immediate connections among sellers, producers, service providers, and consumers. This as true for global corporations, as it is for small businesses operating in remote settings. These technologies have prompted convergence across industry boundaries, propelled mergers across previously unrelated lines of business, enabled simultaneous connections across multiple channels, transformed consumer expectations and experiences, and revolutionized daily living practices across the globe. For businesses and academia, convergence enables new ways of operating, executing, competing, and innovating.
These tectonic shifts require the Center to prepare students to leverage and exploit new rules and opportunities. But not everything is new. Faculty, students and executives must still make decisions that build on business fundamentals—finance, accounting, management, marketing, operations, quantitative skills, strategy and ethics. But beyond this foundation which underpins the Center's raison d' ê tre, faculty, students and managers must see the opportunities for connection between information technology and information content, between customers and suppliers, between alternative providers in the supply-chain, between project innovators within large corporations and those who execute with the agility of entrepreneurs.
The Center for Transnational Leadership and Entrepreneurship at an AAICU institution will advance understanding of convergence on the business landscape by refining learner-centered principles, advancing research, innovating through industry-supported projects and professional engagements, and academic partnerships. The Center will draw on a tradition of excellence in the fundamental disciplines of business, and then shape that core knowledge into a boundary-spanning capability.
For example, academic and professional portfolios in strategic management consulting, finance and investment analysis, organizational behavior, marketing and entrepreneurship create conceptual and practical linkages between the traditional business functions within an organization. Faculty, students and clients emerge with alertness to new business opportunities that can be created through various forms of convergence, but they are disciplined in the application of analytical business tools to examine, experiment with, and evaluate these opportunities. The undergraduate and executive academic programs will include similar distinctive features that prepare students and other participants for convergent thinking and action.
Although technology opens new frontiers for business opportunities and challenges, these opportunities do not fit into neat boxes. They require collaborative endeavors across traditionally separated silos. For example, to join the accelerating bio-technology race, scientists, entrepreneurs, engineers, and seasoned managers must come together.
Similarly, risk management today covers a far broader landscape than in the past, encompassing bio-threats in agriculture, security management of facilities, weather risk management in the energy, manufacturing, and agricultural sectors of world economies, and financial risk management affected by the complex interaction of geopolitical, economic, and psychological factors. All of these opportunities and challenges facing the Center require creative thought leadership and American-style business solutions that span traditional industry or functional boundaries.
The Center focuses on innovation from within to spur growth and continuing innovation of large, mature companies, as well as start-ups. The Center will have the advantage of proven professionals, a world-class faculty, and high aptitude students that advance and disseminate boundary-spanning thinking.
When you consider these distinctive elements-- reflective practitioners, world-class faculty, motivated students, linkages across colleges and universities, and business partnerships-- the Center for Transnational Leadership and Entrepreneurship will be positioned to lead thinking on convergence. The market winners will be those who exploit the opportunities for convergence, without losing sight of institutional and business fundamentals.
ORGANIZATIONAL FRAMEWORK:
“Knowledge is not codified- it's in people's brains. The successful exploitation of ideas is the key, taping into knowledge within the company, and transferring that knowledge among employees. Knowledge transfer is a body-contact sport.” Dr. John Beacham
• Culture: In the Center for Transnational Leadership and Entrepreneurship there exists a culture that promotes camaraderie and teamwork. This culture transcends the administration, faculty, and students.
• Experience: Proven professionals and a world-class faculty are uniquely positioned to help clients improve operating margins by reducing operating costs and improve cash flow. Using the Center's portfolio of risk management and international consultative services, it can help businesses reduce and control operating costs associated with human resources, plant and equipment, supply-chain and logistics, and net revenue reimbursements; enabling these firms to grow surplus, attract capital and compete more effectively.
• Education: The faculty at AAICU institutions include some of the leading and multi-talented business professionals. Students receive a strong business foundation through a rigorous set of core courses. Beyond electives in traditional disciplines, the Center affords honors students the opportunity to intern and “put in practice” their particular strengths in strategic management, finance, marketing, quantitative analysis, and organizational behavior.
• Affordability: The Center charges client fees based on a “Balanced Scorecard” approach. The key concept behind a “Balanced Scorecard” is that executives and managers need easy “at-a-glance” access to a variety of key performance indicators to efficiently run an operationally and fiscally sound organization. Through use of a basic formula, which measures strategic, tactical and operational performance improvement indicators, a fee scale is applied. Put simply, the core objective of the “Balanced Scorecard” approach is to convert information and intelligence into bottom line success and to share the results.
• Knowledge Transfer: The Center focuses more clearly on providing benefits to all stakeholders, and on building mechanisms for rewarding collaboration. It promotes a knowledge-transfer culture by matching financial and other incentives to individual needs; by dismantling barriers to cooperation along the value chain; and staying flexible in funding and organizational solutions which will change as businesses start-up and mature.
• Location: The Center hosted at an AAICU institution provides a unique draw for students wanting to study in a safe and secure environment for reasons of climate, culture, geography, and international business opportunities.
KEY PRIORITIES:
“Research organizations must recognize that customers are people with problems and money. There must be a balance between scientific excellence and customer need.”
Dr. John Beacham
A Center for Transnational Leadership and Entrepreneurship at an AAICU institution has the potential to be truly great. The small size affords the opportunity to reach businesses and ensure excellence in knowledge transfer. Mutual understanding is the key to successful knowledge transfer. Because collaborative, team-working models are widespread, the onus is on both sides to recognize the importance of the human factor. The Center will select faculty and students who are alert to commercial context and industry must choose people who are sensitive to the interests of academia.
Degrees of Involvement
A distinctive feature of the Center is its knowledge-transfer culture. Innovation management is not, primarily, about technology. It is about people, culture and communication. The key to the Center's success is to create a business-aware culture, without devaluing science and technology. This requires managing the interfaces between the functions in the value chain. Change can easily be blocked, because of the many independent players involved, and the cultural misconceptions, or even hostility, which may have arisen. The Center can act both as a catalyst and trainer to companies in identifying knowledge brokers, people who are well connected and can build bridges across functions.
One size does not fit all when it comes to deciding how to exploit new ideas commercially. New ventures can be a source of renewal and growth for a parent company, but the route taken will depend on the core competencies of the organizations involved. The Center also can play various roles in encouraging new business creation and entrepreneurship:
• Commit itself to the new venture and supporting the client in the development of
business plans.
• Undertake joint research and development programs, licensing technologies to spin-
offs, and participating in incubator projects.
• Network on behalf of the new venture, giving it access to management expertise, and
acting as a reference customer.
• Provide support in the form of training and student internship resources.
• Recognize that new ventures are inherently risky and provide risk planning (technical
people are not always good at anticipating the downside).
• Communicate success stories within and outside the parent organization.
In such a competitive market, company communication for finding university and/or college graduates has become of the utmost importance to recruit the right candidate for the right job. The Center will act as a partner and conduit to identify suitable graduates for both national and international companies. The Center will organize “Informational Workshops” and “Career Days” so that companies invited to campus to give presentations and conduct interviews will have the best possible view of the graduates.
Financing the Center
“What are clients looking for? Give me something that I can understand, that no-one else has, that might make us all rich, and with someone attached that can make it happen.”
Dr. William Bains
Three phases are involved in building a Center for Transnational Leadership and Entrepreneurship from an idea into a market player:
• Defining the concept- crystallizing the idea in terms of key players, general market, and
business plan; creating a core team, a legal entity and a business model.
• Developing management consultancy services and market- designing and testing the
product, beginning operations; gaining customers and developing market channels.
• Growing the business to become a revenue enhancer to the hosting academic institution.
The Center's focus at each stage, and the networks at each, will change accordingly. The due diligence requirements for funding the Center will include:
• Seed funding from the hosting academic institution for example, 80% of the operating budget (salaries and operating expenses) in Year 1. and forecast to breakeven in Year 3.
• Grants from the U.S. Government and/or the European Union.
• Business development and educational research loans.
• Client fees from professional engagements and project management assignments.
• Direct and indirect contributions from philanthropic foundations.
The key is to identify the value inflection points - those milestones in the Center's development where funding requirements take a quantum leap, usually at the start of each of the three phases and to match the source of funding to the amounts required. In sum, the more the Center becomes self-sustaining and a revenue enhancer long term, the more advantageous to the hosting academic institution not only financially, but also from a multi-dimensional perspective.
OVERARCHING PHILOSOPHY:
A Center for Transnational Leadership and Entrepreneurship at an AAICU institution like any business entity has a philosophy which evolves as a set of laws or guidelines that gradually become established, through trial and error or through leadership, as expected patterns of behavior. Although such basic beliefs inevitably vary from academic institution to institution, here are five that recur frequently in the most successful centers:
• Maintenance of high ethical standards in external and internal relationships is essential to maximize success.
• Decisions should be based on facts, objectively considered- what is referred to as fact-founded, thought-through approach to decision making.
• The business should be kept in adjustment with the forces at work in its environment.
• People should be judged on the basis of their performance, not on personality, education, or personal traits and skills.
• The business should be administered with a sense of competitive urgency.
A Center for Transnational Leadership and Entrepreneurship of high principle develops better and more profitable relations with clients, competitors, and the general public because it can be counted on to do the right thing at all times. By the consistently ethical character of its actions, the Center builds a favorable image. In choosing among suppliers, clients resolve their doubts in favor of such a Center. Competitors are less likely to comment unfavorably on it and the general public is more likely to be open-minded toward its actions.
Many companies claim to have strategic partners, but do they also have partnering strategies? What is important is the strategy behind a partnership, not the partnership itself. In order to realize the full potential of partnering, a Strategic Management Model for Establishing a Center for Transnational Leadership and Entrepreneurship at an AAICU Institution serves as a blueprint for developing partnering strategies and managing strategic alliances.
INSTITUTIONAL GOVERNANCE:
Change, it was once said, is in almost no one's interest. It is unpredictable, risky, difficult to define, and by nature divisive. At the same time those academic institutions, which do not manage it well, often become irrelevant. A Center for Transnational Leadership and Entrepreneurship at an AAICU institution will help improve communication, develop trust among faculty, students and the administration and work to polish and showcase something, which is truly unique to American-style higher education.
The Center will encourage administrators and faculty to establish an institutional culture with a shared vision, a willingness to understand the organization and its environment, and trust, they gain access to the efforts and enthusiasm of all participants in transforming the institution. Not surprisingly , issues of leadership and shared governance will emerge within the boundaries set by the administration. Furthermore, governance, in all of its forms is vital to the campus culture and leadership is both an organizational and reciprocal process.
However, it is important to define leadership in context that is, we cannot have leaders without followers. If you look beyond the written word, you discover that governance is not simply the end result but the processes used, and the routes taken, so that administrators and faculty could achieve the overall institutional goals. In fact, the collegial campus participants, who perform the work of the organization and effect the necessary changes with improved communication at the school level, understand the concept. If success is to be achieved the transformation is not temporary or stopgap; it is fundamental.
The Center can function optimally in an academic world in which all acts, structures, and events are construed as symbolic; it is essential to take into account the symbolic life of concrete phenomena. Institutional governance through a Center could cultivate the sense that changing budget processes do not destroy core beliefs. Structures change; core ideologies undergo contextual interpretation but remain in place unless found to be false. Most faculty would feel strongly that in order to achieve the proper balance between the parts and the whole requires thorough, candid, and ongoing campus discussion between administration and faculty about the financial condition of the institution and its departments.
The Center can help facilitate institutional communication and governance by working within the context of each department's organizational, operational and cultural framework. For example, while department chairs or faculty committees should be consulted, their views cannot be used to decide how final budget allocations are made to departments, because they are (and must be) advocates that is, special interest groups for their individual departments.
Understandably, no one governance system should be proposed as a panacea that could substitute for strong, effective administrative management and leadership or, the need for judicious decision making by administrators. Communication and its effectiveness as a planning tool depend upon the skills of the people using it. Most important, campus administrators and faculty must collaborate to establish a congruence of vision, mission and academic priorities across the College, so that the individual academic departments and support units are forged into a coherent whole.
Furthermore, campus leadership should retain sufficient academic and fiscal leverage to facilitate achievement of institutional goals, maintain an institutional balance among programs, and respond to constituencies' strategic initiatives. Hence, the Center can be both an integrative component and proactive contributor to institutional governance.
The governance implications resultant from the establishment of a Center for Transnational Leadership and Entrepreneurship at an AAICU institution suggest a need to reinvent consensus decision making so that its inherent limitations, the tendency to suppress dissent and to level all contradictions, may be minimized. A compelling argument can be made that the kind of leadership that could effect truly collaborative decision making involving administrators and faculty, requires skills in which few academic professionals have yet been trained.
In this regard, the Center can help engender a professional and developmental environment conducive to effective and efficient governance. However, if administrators and faculty were to participate in good faith, they must be assured of positive rewards because, essentially, they are being asked to implement a set of coordinated activities across campus that might well redefine or even wholly eliminate their areas of traditional responsibility.
Individuals can be expected to participate honestly in such a process only if they have confidence, from the outset, that their recommendations will receive serious consideration. Even more important, they must be reassured that the entire process is not simply a ruse for getting them to collaborate in eliminating their own employment.
What is paramount in the effectiveness of institutional governance is some concrete and demonstrable expression of appreciation to let a person or group know that their collective efforts through the campus-wide committee process have been noted. The will and determination to make the needed systemic changes in a campus environment with a distinctive culture, is dependent on the participants' sense of reward, empowerment, and security.
UNDERLYING PRINCIPLES:
The Center for Transnational Leadership and Entrepreneurship “value driven” management approach establishes an integrated plan without discontinuity considering hard quantitative facts as well as behavioral aspects, and enabling “value oriented” decision-making. It is a “win-win-win” outcome which ultimately increases the visibility of the hosting academic institution, serves as a strategic recruitment tool, and enriches local and international constituents through “developing sustained excellence.”
Rationale: AAICU institutions in the next five years will undergo major reforms as most private institutions in higher education in Europe and the U.S. , strive to deal with significant reductions in financial resources and increases in costs, demands for accountable student learning outcomes, and stable -or increased- student enrollment.
Decreases in financial resources convert directly into budget reductions and personnel cuts; stated bluntly, more students must be taught with fewer faculty and fewer support personnel. In traditional higher education settings, this would mean sharp increases in faculty workload and, most probably decreases in student learning outcomes.
The higher education setting of the next five years will be marked by a host of new instructional roles in many new educational settings. A paradigm shift in thinking to student learning focused environments creates the foundation for the reform of undergraduate education even its transformation.
Direction: These guiding principles apply to each person and the Center would assume leadership as a natural part of contributing within an institutional team; to question current practices through suggesting alternative practices; and to encourage one another's individual and collective citizenship. These principles are collaboratively generated and are individually and collaboratively enacted.
Learning - Generating and using knowledge and skills to continually adapt, develop, and improve as individuals and as an organization.
Boldness - Embracing change by taking risks and stepping out of traditional roles and practices to extend and re-vitalize the academic work environment.
Collegiality - Fostering a professional community in which the ideas, expertise, and perspectives of each individual are valued, respected, appreciated, and affirmed by their peers.
Collaboration - Working together on behalf of the institution both internally and externally for targeted constituencies.
Diversity - Developing a community of people with different ideas, backgrounds, and experiences.
Innovation - Exploring and actively using all internal, external, physical, intellectual, financial, and technical resources to efficiently and effectively fulfill the vision and mission of the institution.
Service - Sharing skills and knowledge for the benefit of the institution's administration, faculty, students and staff.
Reality: Balance sheets are under pressure as private colleges and universities in Europe and the U.S. try to make ends meet. Consequently, AAICU institutions are increasingly acting in a business rather than educational manner as it seeks revenue sources to plug gaps in operational funding, and meet the projected demand of funds for large-scale capital investment.
Strategy: The administration at AAICU institutions working in collaboration with faculty, students and staff should examine the full array of options and select the operating and management approach best for the institution. Focusing first on understanding how the functional area in question is currently operated and examining all its strengths and weaknesses enables the institution to make a fully informed choice. (Goldstein, Kempner, Rush and Bookman, 1993). A core set of issues and questions must be explored when institutional management is deciding whether to outsource any function. Rush, Kempner and Goldstein (1995) group these core “decision factors” into six categories:
• Human Resources- How employees will be affected.
• Financial- The direct and indirect cost to the institution.
• Service Quality- How each alternative will meet campus needs.
• Legal and Ethical Considerations- The level of risk and potential liability posed by each option, any tax ramifications, any potential conflicts of interest.
• Mission and Culture- The effects of choosing an option inconsistent with the institution's culture and historical mission.
• Management Control and Efficiency- The likely effect of each option being considered on the institution's ability to control the direction and priorities of the functional area.
The growing use of outsourcing in higher education reflects a general acceptance by campus administrators that it will reduce costs while continuing to provide essential university services (Jefferies, 1996).
Successfully outsourcing a function requires careful, comprehensive evaluation and planning by management. The answer to whether or not to outsource is what best serves the institution—not only what is most cost efficient, but also what will provide the most consistency, timeliness and overall quality in meeting the college's or university's goals (Schreiber, 1994).
Action-Plan: A number of “actions” are required to meet new challenges. Among them, the administration should increase and diversify sources of institutional income: sale of services; university partnerships; management of intellectual property; rents from wider, year-long use of facilities, more accountability for financial aid; and a wide range of entrepreneurial activities. Included are selling academic and professional services on the international market, closer links with industry, the extension of fee-paying courses and making part-time courses available to external publics.
Opportunity : A key to the financial success of any emerging higher education model will be the capability to use new information technologies and software in sophisticated ways, and to integrate, as partners, individuals and groups that have only rarely been so involved. An example of this might mean librarians and the library would be key educators and key learning centers. Another example may be the integration of student service personnel into the educational process. External to the institution, this will mean that community members and work site supervisors become partners in the student learning process by interacting with the Center.
A Center for Transnational Leadership and Entrepreneurship at an AAICU institution addresses not only the new economic realities that confront higher education today, but also recommendations for institutional governance. The requirement for a serious rethinking of the way that work is done, the way it is organized, and the financial systems needed to support the academic enterprise as distinguished by its visionary leadership and collegial culture. The lessons learned will enable us to guide action with assurance and wisdom and contribute to the education of students as “citizen leaders” of tomorrow.
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