{"id":2400,"date":"2015-12-07T17:48:00","date_gmt":"2015-12-07T22:48:00","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/hbs-long-term-value-proposition-with-a-remarkably-short-term-operating-model\/"},"modified":"2015-12-07T18:09:03","modified_gmt":"2015-12-07T23:09:03","slug":"hbs-long-term-value-proposition-with-a-short-term-operating-model","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hbs-long-term-value-proposition-with-a-short-term-operating-model\/","title":{"rendered":"HBS: long-term value proposition with a short-term operating model"},"content":{"rendered":"

\"\"Summary<\/strong><\/span><\/p>\n

HBS creates enormous value in the global economy by equipping generations of leaders with the knowledge and perspective to \u201cmake in difference in the world.\u201d\u00a0 However, for a business model that theoretically creates wide-ranging impact across the globe, HBS\u2019s operating model is remarkably fixated on relatively short-term transactions.<\/p>\n

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What is the true value created by HBS?<\/strong><\/span><\/p>\n

The measure of alignment between business and operating models is entirely dependent on how the value ultimately created is defined. \u00a0Fellow classmate, David (1), who also wrote about HBS pointed to the IP\/education\/brand as inherently valuab\"28019190-HBS_slide01\"le \u2013 a view that is probably more correct and one that many at this academic institution doubtlessly share.\u00a0 But the overly optimistic side of me sees these as simply vehicles that\u00a0ultimately drive true economic value by effecting change in organizations throughout the world.<\/p>\n

For a sense of scale, a leaked survey of the class of 1986 revealed 36% of graduates founded a company that ultimately had 25 employees or more. (2)\u00a0 At an average value of $10M, this small piece is almost $4B in value created by less than a third of the class every year.\u00a0 Adding in the much broader impact of the executive-ed and publishing\/research activities probably puts the total value created at somewhere in the range of $10-$100B every year depending on how much of the created value you attribute to HBS.<\/p>\n

Capturing that value<\/strong><\/span><\/p>\n

With this broader definition of value creation, HBS fails miserably at capturing any significant part of it.\u00a0 In 2014 HBS generated ~$600M in revenue, primarily through publishing ($200M), Executive Education ($160M), the MBA program ($120M), and the endowment ($120M+) (3).\u00a0 As a non-profit institution however, this is not inherently a bad thing.\u00a0 The issue arises when the method of value capture drives a misalignment between the operating model and the actual value created.<\/p>\n

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Misalignment between the value created and operating model<\/strong><\/span><\/p>\n

In the case of HBS, because the value is captured largely through short educational programs, the vast majority of its assets are focused exclusively on the programs themselves rather than long-term support, likely limiting the potential value creation.<\/p>\n

\"map\"<\/a>HBS\u2019s operating model includes four critical assets, most of which are largely dedicated to creating a transformational educational experience in the Exec-ed and MBA programs:<\/p>\n