For the past four years, I have been living, full-time, an experiment called ‘Pentacle The Virtual Business School’ There have been two purposes to this experiment. Firstly, it has been an attempt to operate according to the concepts and principles of the New Business World which I have been teaching and consulting on as a business educator. Secondly, and perhaps more grandiosely and arrogantly, it has been an attempt to completely re-invent the management development industry. My business partner, Susan Ross, and I believe we have now created a sustainable model for the delivery of management development solutions to a wide scale of organisations from SME’s to Global, and effective in the public sector.

Over the period we have benchmarked ourselves against a leading and well-known traditional Management College employing approximately 300 full time staff plus associates. The results have been remarkable. For example, over the four year period we have been in operation our ‘core team’ has, at its maximum, numbered five and has been on average three. And yet, over this period, we have managed to deliver a proportional revenue of 10 times our benchmark!

This chapter, unlike all the other chapters, in this book is based almost entirely on first hand experience and experiments which have been conducted over the past four years but never previously published. Unfortunately for the reader most of my client work is of a strategic nature and therefore confidential. I have published all that I feel is acceptable, although some of the detail will not have been revealed. Secondly and more importantly, because few other management development organisations have attempted such a wholesale and radical rethink of their organisations, we can make a claim to be living in the future of management development even though we may only be a few years ahead.

1. THE NEW WORLD OF MANAGEMENT DEVELOPMENT

By the mid 1990s a number of clear trends were showing in the environment of management development:

· A drive for a less parochial view (or a more trans-national view) on courses and programs.

· Fewer opportunities for managers and executives to spend prolonged periods away from their work.

· A demand for real-life business wisdom, skills and application in addition to concepts and models.

· A demand for cross functional (not general management), but issues based programs of learning.

· Organisational demand to encourage managers and executives to ‘take ownership’ of their own learning.

· Probability and recognition of learning through courses.

· Company focus and tailoring of courses but also individual tailoring of programs as opposed to the traditional ‘sheep dip’.

· Client organisations were starting to extensively build their own databases of ‘good’ management developers and to cherry pick tutors to run in-house business courses or insisting on specific faculty members participating in business school courses run on their behalf.

· Loss of profitability of MBA courses as the number of providers has grown faster than the demand for them.

Traditionally business schools focused more heavily on the provision of MBA’s and examinable syllabuses whilst management colleges focused more heavily on direct executive education which is usually not examined. Over the past decade the two approaches have merged and show considerable overlap with most business schools offering (more lucrative) executive education courses and most management colleges offering (more intellectually rigorous) MBA’s.

However the operating models for a business school or management college have remained unchanged for 30 years. Research is largely still via the case route (collect data on several organisations, usually within an ‘industry’), present proportional data, or study one organisation in detail over a period of time and create a case study. Case studies have also remained the key method used in the classroom. The use of complex, live exercises or computer simulations acts as a peripheral activity often taking up less time than ‘outdoor’ exercises or site visits, where these are incorporated in the program.

This has hidden a deeper underlying problem. A re-engineering project that the Author was involved in during the mid 1990s showed that at one major management college 40% of the internal process steps were ‘ad hoc’ or individual dependent. And of the 13 major processes only 3 related in any way to money making. Furthermore, there was no relation between activities and value to customers. For example A4 handouts in binders were produced and supplied to customers automatically without any audit of what material was used subsequent to the course and how it was used. The process by which research topics were selected did not include a review of what was required by customers. Instead research topics were selected on the basis of interest to the researcher. As a result of this inefficiency and ineffectiveness, in spite of the high fee levels of the schools, the profitability was low.

At the same time most of the management consultancies were going through a relatively lean time, suffering increased pressure to ‘follow-through’ or ‘help with implementation.’ In addition there was some demand to ‘leave behind some of the learning’ they gained during assignments, with the executives and managers of the organisations they consulted for. However the management consultancy model usually revolves around experienced partners supported by a young army of MBA / junior consultants. This model doesn’t allow for the client demand to be met easily. Much of the profitability of such organisations derives from the ability of their corporate brands to stretch like an umbrella to shield and allow inexperienced consultants to be deployed at significant fee rates for significant numbers of hours. A significant proportion of the profitability from this model arises from keeping this ‘army’ actively occupied. So unless the client wishes to pay additional costs for the transfer of learning the consultant is quickly moved on to the next assignment. The other factor which makes any transfer of learning difficult is the short average duration of stay within the consultancy of these young MBA’s. This meant that much of the knowledge captured during any consultancy assignment was quickly lost or dissipated. And finally most consultants are trained as consultants and not tutors, trainers or educators and the processes used for transferring learning are often ineffective.

During the decade leading up to the mid 1990s, independent trainers and consultants were able to increasingly nudge into the marketplace by offering either lower cost/ longer or more comprehensive versions of management skills workshops run by the business schools or management colleges.  Or they could offer highly tailored workshops applying the business school models (usually strategic models) to specific company or organisational situations. Or to provide localised consultancy support to organisations. Often the independent trainers or consultants were current employees of the same business schools or management colleges moonlighting or ex-employees of consultancy organisations.

The net effect of these models:

The middle ground between intellectual rigour /   pragmatism and conceptual strategic thinking and effective implementation and assimilation of the ways of working into the organisation was increasing in demand and yet none of the more traditional models were designed to provide solutions to meet the actual need.

In hindsight all the trends and effects are predictable and easily attributable to the existence of what I call the New World. I have described in detail elsewhere the concept of the New World. In summary it simply explains the current business environment where the pace of change, complexity and expectation far outstrip the ability of organisations to learn. A fuller summary is presented below.

Because of the poor strategic positioning of the institutions and organisations, the future for business schools and management colleges lies in merger, either directly or via a backdoor route, through increased use of globally shared faculties.  The philosophy and delivery of concepts and courses became completely dependent on the participating tutors rather than a predominant and coherent school of thought associated with the college. This would lead to a take-it-or-leave-it ‘jumble sale’ approach to management development. Another alternative emergent future is the acquisition of business schools and management colleges by major consultancy or accountancy firms in order to use their brands and captive audiences as a route to selling upstream. This would again dilute the academic and intellectual rigour of the organisations.

It is against this backdrop that the concept of Pentacle The Virtual Business School was born.

The New World environment and Virtual/ cyberspace

I would like to take you on an exploratory journey into the nature of the New World. Few people today would argue with the assertion that the pace of the world is increasing. It is intuitive that the combined effects of customer expectations spiralling out of control, high speed financial markets operating primarily on speculative capital, increasing regulation and legislation, convergence and divergence of technology and decreasing cost but increasing pervasiveness of communication, mean that for most organisations, if they were to intuitively chart globally, parameters like the pace of change, complexity of your organisation’s environment, the level of competition, etc. over the past decade it would probably look like this.

Interesting, but so what?

How about if I asked you to think about how fast your organisation learns. That is the time from when it sees something, understands it and knows what to do about it. Take some time to think about this. Note I said your organisation, not you. Think about what limits the rate at which your organisation learns. Is it the people at the top? Is it the speed or rate at which information about external events, such as customer demand changes, filter into the organisation? What is it? For most people who live in a hierarchy the speed of learning tends to be limited by the people at the top. For most organisations a couple of decades ago, the speed of learning was limited by the person (man) at the top. If they were a smart Henry Ford or Thomas Watson Jr., the organisation could learn faster than their world changed. If they were not that smart they might get an initial foothold but eventually competition and change would weed them out. We’ll only concern ourselves with the smart ones. By smart ones I mean your organisation as well. Over the same period what has happened to your organisation’s ability to learn? Could you represent it graphically on the figure above? The organisations we have decided to consider start with their learning rate higher than the change of the parameters within their local environment. But what happens next?

Do you agree? So now you are thinking, "If there is a gap between the two lines the trick is to close the gap. In fact," you think, "if only we could close the gap and put the learning curve above the ‘change’ curve we would be in control again. We could run our organisation from a position of knowledge. You have probably concluded that, "The aim is to learn faster, to create the Learning Organisation and then all will be well. We will once again be able to learn faster than the world changes."

"No!" I exclaim. "Wrong!"

Why wrong? Because it is now a different context. Learning faster would only encourage you to accelerate the pace of change.

Before we move on. I’d like to explain the differences between the two environments. The one in which you can learn faster than the world changes versus the one in which the world changes faster than you can learn.

If you lived in a world where you could learn faster than the world changed, how would you feel? What would you value? What would the same good rules of thumb be for making money? How would you organise people?

Now, consider what would alter if you lived in a world which could change much faster than you could learn. How would you feel? What would you value? What would the same good rules of thumb be for making money? How would you organise people?

See? They are not the same. In fact, in most instances they are diametrically opposite. And the names, nicknames, I use for these two environments, as if you hadn’t guessed, are:

Built into the New World is a phenomenon which we have not experienced before. This phenomenon has created an environment, a space, which not only obeys different laws, but also is probably already bigger than the ‘real world’ environment we currently live in. This phenomenon is ‘cyberspace’.

To most of us making a phone call no longer seems miraculous, something special, and yet it represents one of the biggest changes in interaction we can now exploit. You see, once upon a time, two people would meet in a room or on a path and have a conversation. We could say where they met and had their conversation. It was obvious! It was in the room or it was on the path. However, now if you phone someone up, exactly where is the conversation taking place? Is it at your end? Or at their end? Or both ends? Or perhaps, something which is both ends and also in-between but it isn’t really a place. This room, this space, where your conversation takes place, is cyberspace. It is the place where electrons and software applications live. We, us humans, live in touchspace - the world where we can physically touch each other. We interface with cyberspace through the ear-piece of the phone, through the computer screen, television, fax. So now we have the choice of interacting with two environments, touchspace and cyberspace.

Cyberspace is already bigger than our physical world, containing enough information to fill several lifetimes of learning. (Just think how long it would take you to read everything on your computer.) In cyberspace everything moves at the speed of light. Concepts we are familiar with, density, gravity, smell don’t apply. The interconnectedness of people, cultures, trade and ideas creates surprising emergent outcomes. And most important of all it fixes the speed of change and interaction well above the traditional rate of learning for most organisations. This is the New World. A world where you are more likely to describe the time it takes to travel to a meeting in Amsterdam than the actual distance you travel. A world where events in customer or financial markets on the other side of the globe can deal devastating impacts instantly or provide tremendous opportunities.

If cyberspace exists, it exists in our minds. Just as both people in the phone conversation thought the conversation existed because it exists in our minds, it exists as we perceive it and only as we perceive it. It exists only so far as it interacts with us in touchspace. Cyberspace is a world which has the effect of being real but actually only exists to us when we perceive it in our minds. It is a virtual world.

In a New World environment, as information becomes more available in an appropriate format and as we begin to understand how to utilise the multi interactions of virtual space world, training replaces supervision as the key route to getting the desired outcome.

As a result this New World works to different rules. A significant shelf-life only remains for the knowledge, skills, ideas, values and competencies which allow us to influence the future.

The problem with the New World is not only that we can’t learn as fast as the world changes, it is also that many outcomes / outputs, especially for business organisations, depend on a wider and wider range of knowledge, skills, values, technologies and competencies. This forces us to have to learn about a greater range at a faster speed.

Continuous learning

The concept of continuous learning was invented as part of the way out of the issues facing business education. The diagram below summarises the shift in emphasis away from knowledge provision to a continuous model based around knowledge and skills and application in the real business environment.

The real barrier to any shift to the traditional model is the pressure it puts on the economics of the business. The margins generated by a single tutor dispensing knowledge to 20-100 students are hard to match. The increase in value for money or effectiveness of any new approach would have to be significant, of an order of magnitude at least, in order for the same profitability to be reached or else it would require significant premium pricing. This led to the invention of another concept:- local learning.

Local learning

The local learning concept is simple. The additional ‘contact time’ would be delivered at the participants’ place of work, in their own (not course) time. With participants focusing on issues which affect the business directly. The net effect of a reduction in the time spent on general (and often irrelevant) case studies, time and cost saved in travel, and increasing the focus on work which primarily affects business performance or explains typical patterns of business issues which are likely to be encountered in the near future, would re-balance the economics of the course.

We quickly realised that making local learning work was dependent on us inventing another concept, that of a:- ‘virtual meeting space’.

Virtual space

Virtual space is the use of cyberspace through groupware (software which allows several people to share knowledge and work on the same information at the same time) to create an area with access by course members and tutors where issues and problems can be openly discussed and resolved. Tutorial support would be on subjects as required and would involve the invitation of tutors to join the space. This invention led in turn to the need for a further concept, that of virtual faculty.

‘Virtual Worlds’

Our virtual worlds come in many different forms. Some exist in cyberspace but as many others exist only in touchspace, ranging from virtual reality environments and simulations through to web style electronic coaches, through to real life ‘canned’ projects with real life organisations to apply the learning from a program / course or workshop to someone else’s environment. We have created scenario based simulations which quickly present the executive with the typical dilemmas in a business situation, role play games working through critical incidents in an organisational structure which mirrors the real life organisation.

What is ‘The Virtual Business School’?

Not a traditional business school, not a consultancy, not a training organisation. The Virtual Business School is best placed to help organisations deliver a solution to most of the pressures of the New World through highly tailored, continuous learning for executives and managers.

The two diagrams below represent the best positioning of Pentacle The Virtual Business School in terms of how it serves customer needs. The size of the circles is more a reflection of the flexibility of approaches which being virtual allows, than an attempt to suggest it is a cure all.

The strategic ‘Bubble diagram’

Prior to starting up the business, a business model was created to explore how start up might occur and to highlight the routes to creating a virtual business school. The diagram below is the initial business model created in 1994 which has since been modified but still contains many of the initial elements. The interdependence of client and tutors is apparent, as is the importance of operating strictly according to the rules of the New World.

The experimental method

The experimental method we have adopted has many significant advantages over a case approach. Firstly it is first-hand and the effects can be viewed directly rather than after post rationalisation. Secondly there is transparency in the original objective and purpose of the action whilst in organisations this is often obscured by political pressures. There are also some disadvantages which will be described below.

We have tried to do everything by projects. Even to the extent of bottlenecking ourselves by relying on outsourcing for carrying out the bulk of our photocopying so we can attribute photocopying effort to a particular project or activity. The approach of using projects as much as possible makes it much easier to notice and evaluate the effects of decisions and actions taken within the business. Many projects are pragmatic because they involve spending real time and money in real time, so we often intervene in them to influence them towards success even though the initial thinking or planning may have been incorrect. This means that there are fewer outright failures than would be expected with a non-interventionist approach. The final problem with the method has been that it has not been possible to operate a control.

The business rules and philosophy:- practising what we teach

We realised early on that the only way that we could run and deliver results through The Virtual Business School was ourselves to operate strictly by the New World approach we were teaching client organisations. As a result we set up on our screen savers the purpose and operating principles of the business as:

Super-ordinate Purpose of Business:

· Fun and Learning

Approach:

The operating principles are based on the New Rules for the New World

· Do Nothing which is of no use

· Delight and challenge the people we work with

· Always Tit-for-Tat

· Do it once

· Do it Now!

 

THE DIARIES:-

Some of the key "Aha’s" and highlights of operating a virtual organisation in a New World way and developing learning approaches and business solutions for clients are given below,

The benchmarking exercise

The first published benchmarking exercise in 1996 was in response to a request by Open Learning Systems magazine. Up until this point, and indeed until late 1997, we had been very secretive about all our progress in creating The Virtual Business School. Strategically we had decided that there was no real competitive advantage to be gained by raising our profile, except directly with clients or potential clients. We needed to minimise publicity to the level of reassurance for clients without alerting potential competitors of what we were up to. In the management development ‘industry’, because of the high predominance of concepts and words, it is easy to have a core concept distorted and published widely. Furthermore it is possible for competitors to claim that they can offer equivalent services, even if they can’t, since direct comparisons are very difficult.  No one goes on the same course twice, even if it is run by different organisations.

The benchmarks published were:

Ratio of variable costs to fixed costs

Traditional 1:8 Virtual 3:1

Ratio of educators to support team

Traditional 1:5 Virtual 6:1

Ratio of knowledge input to skills and application (hr.)

Traditional 4:1 Virtual 1:2

Delivering continuous learning

We have developed an approach to ensuring that the management development provided will result in business benefits rather than serving simply as educative. The main way in which this issue is addressed is to apply the Socratic method to all the requests made of us.

The Socratic method involves establishing actual or potential cause-effect relationships in a business situation. By creating ‘bubble diagrams’ we try to ensure that there is a real, or potential, route from specific learning to business results. Where additional internal activities (e.g. changing appraisal and rewards or changing market policy) are required in order to allow the learning to be translated into practice we indicate these needs to the client.

Another area of innovation in delivering learning has been in the design of programs. Our approach to designing programs involves the use of touchspace and cyberspace in order to provide ‘continuous learning’.

We have learnt that at this stage in the New World, although it is possible to operate effectively and almost completely in cyberspace, many executives and managers are unwilling to trust, in cyberspace, people they have not previously met in touchspace. This makes the group working aspect of cyberspace very difficult.

So far the programs we have designed and run are completely tailored to the clients’ demands in terms of effectiveness of learning, costs and the focus on solving business issues.

As a spectrum a range of program frameworks are described below:

We also had to rethink the design of modules in order to provide both learning and accelerated team development. Most learning modules are based on what I describe as the cognitive and emotional roller coaster.

The cognitive and emotional roller coaster is a design method which allows participants to move from unconscious incompetence to conscious competence whilst at the same time becoming more emotionally engaged with the learning and each other. This allows effective operation of learning in cyberspace.

The use of cyberspace and touchspace is decided based upon the model below which has been previously published.

Over and above the diagram above, the constraints on the use of cyberspace are the ability of the executives or managers to type and use common IT packages. The workload, policies, prejudices and expertise of the internal IT / IS department is also a major barrier to making cyberspace work for us.

Bringing it to life for clients

Below are some examples of real issues for which solutions have been provided by Pentacle The Virtual Business School. Because of limits of confidentiality on real strategic issues I have provided a skeleton to explain the issue and solution. I have included examples of both successful and less successful implementation of continuous learning.

Example: Priming the Corporate renewal pump - Motorola

Key words: Global company, pan European, new business creation, using resources effectively across Europe

VBS programme: Modular learning events supported on-line 12 months

Example: Culture change - Glaxo Wellcome

Key words: Self directed teams, culture change, project management, empowerment, customer focus

VBS Programme: Application workshops and short learning events attempts at on-line support were unsuccessful due to IT policy

Example: Developing real working New World organisation - Novartis

Key words: Organisational design, virtual teams, business teams, customer facing, process re-engineering

VBS Programme: Consultancy, organisational design, development of models, application workshops, short learning events, mentoring executives

Example: Creating corporate courage within managers - Nuclear Electric /  British Energy

Key words: Business performance, leadership, process focus, implementation of strategy

VBS Programme: Workshops, live exercises, virtual worlds, continuous support

Example: Competitive advantage through effective project delivery - Simmons & Simmons (legal professionals)

Keywords: Culture change, client focus, resource co-ordination, project management

VBS Programme: Conference style workshops, training cascade

Example: Analysis of strategy, delivering strategic implementation - William M Mercer (consultants and actuaries)

Key words: Culture change, information based structure, organisational design leadership

VBS programme: Applied workshops, continuous support

Example: Creating a coherent and effective executive team - SmithKline Beecham

Key Words: Leadership, virtual teaming, market focus, strategy

VBS programme: Workshops, mentoring, simulations and virtual worlds

Example: Effective use of Strategic IT resources - IPC Publishing

Keywords: Culture change, program and project delivery, information strategy

VBS programme: Successful use of on-line support since all constraints were in the hands of the target population

Example: Creating a strategic implementation method (program management) - Bank of Ireland

Keywords: Customer international finance, strategy, integration, people development

VBS programme: Modular workshops, attempts at on-line support were unsuccessful due to IT capability and policies

Example: Developing a new approach to implementing change through projects - Boots the Chemist

Keywords: Change, new learning train the trainer, retail delivery, culture change

VBS programme: On-line development and delivery of manuals and course content and simulation

 

The key conclusions are:

· Ensure that executives / managers have the skills and capabilities to use IT.

· Manage stakeholders in the IT / IS departments to gain early support.

· Use common / platforms e.g. Lotus Domino or direct internet web page access as a primary route in order to minimise internal IT support issues.

· Ensure participants agree ground rules on how the shared virtual space will be used and managed.

· Agree confidentiality limits to prevent participants from being reticent about what information they share.

· Carry out reasonable training on how to use the virtual space. The concept of e-mail is well understood but not that of shared space.

· Ensure that tutors respond regularly to requests from on-line participants.

· Ensure that tutors regularly make requests of managers / executives.

Delivering effective learning:- Developing Columbus the Virtual Reality Business Game

Most business games and simulations force a context on the player. This often limits the ease of transfer back to work. Columbus was created on a Superscape virtual reality platform. It allows the player to enter and interact entirely with the environment and to explore the outcomes first hand and real time. It is based on the New World rules:- make time fit, fair = different and unlearn everything.

Delivering effective learning:- Developing the e-coach

Our electronic coach concept is based on the New World rules fair = different and go virtual. It is a coaching package which either speeds up or slows down, or follows long or short cuts, depending on the skill level of the person being coached.

Delivering effective learning:- The ‘live’ project

Our live projects are designed to match the situation and have included working with / on General Practices (NHS), Solicitors and Hospices. Projects have also been carried out directly inside client organisations themselves.

Delivering effective learning:- Scenario based learning through simulation

By collecting the strong emergent patterns of situations we have created scenarios which can be navigated by executives to allow them to ‘see the future’.

The business angle

This chapter focuses more heavily on the education and learning side of our organisation. In reality, operating the business side is just as, if not more, difficult. Some of the key areas of difficulty are listed below:

7. CONCLUSIONS

Pentacle The Virtual Business School has operated profitably from its inception, without subsidy or special charitable status. The productivity improvements provided by making use of all the advantages of the New World environment are evident. Customer satisfaction throughout the period has been exceptional with 90% of courses scoring at least 6 out of 7 in post event surveys. Feedback and comments from clients suggest that so far strategy implementation and improvements in business performance associated with the programs run cumulatively to 100’s of millions pounds sterling.

There will be many future attempts to replicate or copy the model we have created and in time this will revolutionise the concept and the delivery of management development and education. I believe that the model created by Pentacle the Virtual Business School is a cornerstone for the future of management education and development.

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Acknowledgements:

A Burnett