Story from Business Week
A corporate icon is diving into the MBA world, and he's bringing his well-documented management and leadership principles with him. Jack Welch, former CEO at General Electric (GE) (and BusinessWeek columnist), has announced plans to start an MBA program based on the business principles he made famous teaching managers and executives in GE's Crotonville classroom.The Jack Welch Management Institute will officially launch this week, with the first classes starting in the fall. The MBA will be offered almost entirely online. Compared to the $100,000-plus price tag for most brick-and-mortar MBA programs, the $600 per credit hour tuition means students can get an MBA for just over $20,000. "We think it will make the MBA more accessible to those who are hungry to play," Welch says. "And they can keep their job while doing it."
To make the Jack Welch Management Institute a reality, a group led by educational entrepreneur Michael Clifford purchased financially troubled Myers University in Cleveland in 2008, Welch says. Welch got involved with Clifford and his group of investors and made the agreement to launch the Welch Management Institute.
Popularized Six Sigma
For Welch, the new educational endeavor is the latest chapter in a long and storied career. As GE's longtime chief, he developed a management philosophy based on relentless efficiency, productivity, and talent development. He popularized Six Sigma, wasn't shy about firing his worst-performing managers, and advocated exiting any business where GE wasn't the No. 1 or No. 2 player. Under Welch, GE became a factory for producing managerial talent, spawning CEOs that included James McNerney at Boeing (BA), Robert Nardelli at Chrysler, and Jeff Immelt, his successor at GE.
Welch's decision to jump into online education shows impeccable timing. Business schools in general are experiencing a rise in applications as mid-level managers look to expand their business acumen while waiting out the current job slump. The new program's flexible schedule—paired with the low tuition cost—could be doubly attractive to those looking to move up the corporate ladder as the market begins to rebound.
Ted Snyder, dean of the University of Chicago's Booth School of Business, agrees. "I think it's a good time for someone to launch a high-profile online degree," Snyder says. "If you make the investment in contentthat allows for a lot of interaction between faculty and students and also among students, you can get good quality at a much more reasonable tuition level."
Welch's Secret Weapon
That being said, there are challenges that an online MBA program like Welch's will have a difficult time overcoming, even if the technology and faculty are there. "The integrity and quality of engagement between faculty and students is the most precious thing we have," Snyder says. "Assuming it's there, it dominates. These things are hard to replicate online."
But Welch does have one thing that differentiates his MBA from others: himself. "We'll have all of the things the other schools have, only we'll have what Jack Welch believes are things that work in business, in a real-time way," he says. "Every week I will have an online streaming video of business today. For example, if I was teaching this week, I would be putting up the health-care plan. I'd be putting up the financial restructuring plan, talking about it, laying out the literature, what others are saying, and I'd be talking about it. I'll be doing that every week."
Welch and his wife Suzy are also heavily involved in curriculum design, leaning heavily on the principles he used training managers at GE.
"In every course there will be pieces of what I taught at Crotonville," he says. "In the budgeting part there will be a view of conventional budgeting and a view of budgeting my way, and students can debate the two. Same thing in strategy. I have a method of strategy, Michael Porter has a method. We'll use Porter's book and then I'll throw my stuff in."
Lots of Competition
Welch isn't a stranger to the MBA world. For the past three years, Welch has taught an extremely popular leadership course at MIT's Sloan School of Management, based on the leadership principles covered in his best-selling book Winning. Welch also lent his name to the business school at Sacred Heart University in Fairfield, Conn.The Management Institute marks a more active leap into the business degree landscape, but Welch is far from alone in offering an inexpensive online MBA. Many business schools known for their full-time graduate programs offer online components to their MBAs, including Maryland, Massachusetts, Carnegie Mellon, and Ferris State University MBA. Also, for-profit institutions like the University of Phoenix (APOL) and Cappella University (CPLA)have made names for themselves offering graduate business degrees primarily online at bargain prices.
In the short term, Gary Bisbee, director at Barclay's Capital, doesn't see the Jack Welch Management Institute as much of a threat to the more recognized online education brands. But with the right mix of marketing money and curriculum innovation, it's feasible that in the longer term the Welch Institute could become a serious competitor. "It would make sense that the school could become one of the successful players in the industry, given his reputation for management skill and maybe even more so developing leaders," Bisbee says. "I would clearly think they could become a player over time."
Upside in Online Education
To help him get there, Welch has chosen a dean and is working closely with a select group of prospective faculty members whom he hopes will soon be in place to turn the lights on in September. Ideally, he would have a few hundred students enrolled at that time, gradually increasing the number over time. "We intend to start slow," he says. "Our interest is in developing a quality program and we're not interested in a big ramp-up."
While launching a new MBA program might seem risky, especially with so many seasoned players in the market, Welch isn't concerned. "There's no risk," he says. "So people lose a little money. The reward is that a winning management formula spreads further than it already has. It's already spread widely. Now, we want to add more people to it. Online education is going nowhere but up. It's for real. It took me a long time to get there, being a bit of a traditionalist, but you see the way that kids learn, the way that they are more attentive. I think it had opportunities to be more rigorous. I'm very excited about where we're going."
