I’ve chosen Harvard Business School (HBS) as an example of a company with an effective alignment between business and operating models.
HBS creates value by pooling top-tier educational resources (professors, programs, technologies, support staff).
HBS captures value by organizing these resources into a leading “education factory” with multiple active processes.
HBS transforms the following assets into valuable actions:
- Brand: as a long-established educational industry leader, the HBS brand acts as a veritable homing beacon for global top-talent who borrow the brand’s credibility to achieve success which, then, returns credibility to the brand–a self-perpetuating cycle. The brand is also capitalized by hundreds of SKUs worth of apparel, accessories, offices supplies, stuffed animals, and other miscellania sold in-house and by outside vendors.
- Program: at a through-put rate of two years, HBS outputs 1000 (+/-) MBAs/yr, charging its 2000-student capacity $100k annually, a value paid to and retained by HBS as work-in-process added educational value to students which are manufactured into alumni.
- Campus: leveraging its other assets, HBS offers its facilities as venues for events and as an incubator for some in-house start-ups.
- Professors: like students, professors are drawn by a brand they subsequently reinforce. Their research is funded and owned by HBS. They might be considered “Research and Development” as they innovate the program, which is HBS’s central asset. However, they are also required to manage and teach the programs they develop, so they may also be thought of as “Factory Management.”
- Intellectual Property: HBS also, brilliantly, sells the intellectual products its professors produce via online courses, its printing press, and executive education programs. This allows them to extract additional value from pre-developed products already put to use elsewhere at little additional cost.
- Students: are experts drawn largely from leading related professional environments and used to improve the program and to advocate it during summer internship and global immersion projects in countries and companies of interest. Also, as “Raw Materials” prior to entering the program, they self-select for quality (!).
- Alumni: in addition to being powerful advertisements, are solicited for donations from incomes known to be higher as a direct result of the program. Further, they help with the placement of students and the production of program material.
So, HBS is able to sustain itself and grow financially. What’s interesting, though, is that these things are for the sake of producing worldwide leaders of prominent positive influence. Each of the assets listed could be hazily measured with influence as a capital metric. HBS is actually a private non-profit acting as an entirely self-sufficient global helm. Moreover, all of its assets replace assets that are never really consumed (discounting natural or unnatural death) and synergize with one another to exponential effect.
The business model and operating models leverage each other so efficiently and interconnectedly that repeat value is extracted from every asset for the sake of every other asset, self-sustainedly, in a way that also emanates influence outwardly at little additional cost.
Perhaps it’s a coy meta-exercise to write on HBS from within its walls, but shouldn’t HBS actually be the optimal example given the buzzwords “business” and “education”?