THE ALUMNI NETWORK AS A COMPETITIVE ADVANTAGE OF ELITE BUSINESS SCHOOLS
By Dominic Basulto

While many Russian applicants focus almost entirely on generic B-school rankings or an average starting salary upon graduation, there are many more factors to consider in choosing and then matriculating at an elite Western business school. An important - an often overlooked factor - is the role of business school alumni in building and maintaining the reputation of the business school. The largest business schools (Harvard - 880 per class, Wharton - 790 per class, INSEAD - 600 per class) derive tremendous competitive advantages from their size over the competition. In Europe, the next largest competitors to INSEAD are London Business School (244), and IESE (216). In other words, INSEAD graduates three times the number of students as its European rivals on an annual basis. The competitive advantages are especially important in three areas: 1) job placement and career development 2) networking and 3) consolidation of the B-school's international brand.

#1: JOB PLACEMENT AND CAREER DEVELOPMENT

The easiest place to see the role of an enhanced alumni base is in the area of job placement and career development. Traditionally, current students have access to an updated database of a B-school's alumni, divided by country, sector of employment, and even by specific corporations. If not looking for a traditional career in investment banking or consulting, then these alumni are vital.

These alumni can provide access to hard-won interviews, "lobby" for worthy students, and provide as well hands-on information about career opportunities, job openings within the industry, and advice about interviewing (such as commenting on a firm's corporate culture). In fact, Yale School of Management presents each departing graduate with a leather-bound book with the contact information of all alumni. Each year, Yale's Office of alumni Affairs solicits students for updated information, which can't then be distributed to job-seeking candidates.

Keep in mind that while 70-80% of all job offers at elite Western business schools are derived through on-campus interviews, the remainder are made through contacts and off-campus interviews. If a corporation is not interviewing on campus, then one must rely on "insider information," such as that provided by alumni. In general, alumni are the recruiters sent by the corporations to visit the campuses of the business schools and hire the next crop of MBA graduates. As such, these alumni can effectively put pressure on their firms to hire more of their B-school's graduates. For MBA graduates who have already, alumni become valuable when contemplating a further career move. According to London Business School, the typical MBA graduate changes jobs within 24 months. Thus, the alumni network becomes vital in isolating those firms looking to replace senior managers or otherwise hiring mid-career MBA grads.

#2: NETWORKING

Alumni are uniformly loyal. Polls such as Business Week have been careful to take into account the extent of this "alumni effect." An entire category in most polls is devoted to "graduate satisfaction." B-schools attempt to stimulate this loyalty by encouraging and fostering a broad range of activities, conferences, and even reunions for their graduates. MBA programs such as IESE provide on-line information for their alumni, including education, professional services, and news about upcoming events. The key point is for alumni to keep in touch with each other - and the B-school. Faculty members conducting cutting-edge research on companies can also piggyback on an enhanced alumni base, especially if the alumni are engaged in an area of business applicable to the faculty member. Aside from the obvious job-related aspects of these networking activities, there is the important benefit of constantly updating one's business knowledge, so as to prevent one's MBA from becoming obsolete.

From a more cynical perspective, a satisfied and involved alumnus is also a wealthy alumnus and one inclined to help out future graduates of the business school as well as the business school itself. While business schools seek to emphasize their academic component, it should not be overlooked that business schools are a business. Like any business, they must look to their balance sheet. An important source of income is alumni giving. At Harvard Business School, alumni routinely make donations that help finance an impressive campus, modern amphitheaters and meeting rooms, and state-of-the-art technology in the classroom. Prior to asking for donations, most savvy B-schools stage a number of events - such as reunions - in order to maximize feelings of loyalty and gratefulness in their high-flying alumni.

#3: CONSOLIDATION OF THE INTERNATIONAL BRAND

The fact is that only the largest business schools have truly global placing power and influence. Russian applicants to business schools would be advised to consider the breadth and dimension of the alumni pool. London Business School boasts 11,000 alumni in 80 countries; IESE has 18,000 alumni in 70 countries working for 4,000 different companies, and INSEAD has 10,000 alumni world-wide (only 24% of which are in France) and 31 different national alumni associations. Finally, Harvard has produced over 60,000 graduates, dominates CEO positions in Fortune 500 companies, and commands a "name brand" in practically any country of the world. Moreover, the number of case studies, published papers, journals (Harvard Business Review), and pure hype that has emanated from HBS is truly staggering.

While this fact of the "international brand" may not comet into play if a candidate is planning to work in New York, London, or Hong Kong, it becomes of vital importance if a candidate is planning to work in non-traditional post-MBA cities such as Moscow or other cities of the former USSR. In this case, the traditional rankings lose their signifying power. B-schools such as Dartmouth are relatively unknown in Europe and Asia, despite "Top 10" rankings within the USA. In an effort to compensate for this fact, the Wall Street Journal Europe publishes a list of the "Top International MBAs," ranking INSEAD, Harvard, Wharton, and London Business Schools as the most globally-oriented MBA programs.

Lastly, a large (and active) alumni base consolidates the international brand by guaranteeing that a B-school is constantly "in the press." These press clippings can then be disseminated to recruiters, applicants, current students, and yes alumni. Leading business schools provide current information to students about newsmakers in the press, and are even more delighted if these newsmakers are far afield in Europe, Asia, and Latin America. For instance, Yale distributes updates to its alumni through magazines and newsletters about outstanding graduates of its MBA program who appeared in high-profile publications such as Business Week, Forbes, and Fortune. In marketing parlance, think of the increased alumni base as additional distribution points for PR about the business school.

In conclusion, then, an important competitive advantage of elite Western business schools is the alumni network. This alumni network becomes all the more powerful if graduates of the MBA program move beyond the mid-level manager position by becoming a CEO or starting a new high-tech business. At the top B-schools, access to this alumni network may be one of the single most important factors in the long-term payoff of the MBA degree.

Dominic Basulto is a 1998 graduate of Yale School of Management and currently works as a consultant for Pericles ABLE. He represents Pericles in America and does MBA Advising through the internet. For more in formation please write to info@pericles.ru or call us at 292-6463/5188 www.wetfeet.com.