Illustration by Courtney Granner

block behind home plate at the old Durham Athletic Park, close enough to smell the hot dogs on game day but too far back to snag a long foul ball, sits the office of an unusual start-up business. The converted tobacco warehouse is just north of Durham's downtown loop road. But, like the trailblazing company it houses, it's far enough off the beaten path that part of the street leading to the entrance is gravel.

Inside, the office sports sleek wooden floors, exposed ceiling beams and ductwork, and huge windows through which sunlight pours. While some young employees sit at their cubicles quietly typing away on computers, managers hold meetings in conference rooms that bear the names of innovative thinkers through the ages: Aristotle, Sir Isaac Newton, Marshall McLuhan. This isn't the headquarters of some fledgling biotechnology company working on a breakthrough drug. Nor is it home to a dot-com company that has survived the implosion of the Internet boom. It is the office of Duke Corporate Education Inc., informally known as Duke CE, an operation established three years ago by the Fuqua School of Business to develop and teach executive- and managerial-training courses for Fortune 500 companies. It's a self-styled hybrid: "a cross between a business and a university." The corporate structure is that of a stand-alone, for-profit company, with Duke University as the majority shareholder.

The venture marks Duke's first major foray into for-profit services, a nascent but, according to experts, growing field for colleges nationwide. Already, the medical school is in the final stages of drawing up plans for a business incubator that would combine university research projects with outside investment, and nursing-school officials have discussed the idea of packaging and selling parts of the school's curriculum to other institutions.

Partners Across the Pond

" More people are looking at scenarios like this," says Michael B. Goldenstein, director of the education practice at the Washington, D.C., law firm Dow, Lohnes & Alberston, which has helped structure several for-profit ventures for universities. "It's a legitimate way to expand the reach of the university and build on the talent and research they've created."

That's the foundation that the president of Duke CE, Blair Sheppard, wanted to exploit when he came up with the idea for the company. Like many leading business schools, Fuqua had provided executive training to corporate customers for years, letting professors build courses around their specialties, from personnel management to marketing to finance. Fuqua had been so successful at it that corporate education had become a huge profit center for the school, and national rankings of such programs consistently placed Duke among the top providers.

But in the mid-1990s Sheppard, a Fuqua professor, saw that corporate education was evolving faster than universities could adapt to handle it: Major companies were seeking more customized training programs that could be taught worldwide. Duke's academic culture, as at most universities, is driven by research and focuses on individual disciplines, while custom corporate programs usually focus on solving business problems that cut across several disciplines and must be delivered quickly and in ways that cater to the changing needs of individual clients.

" Education is more strategic than before, and it's much more large-scale," Sheppard says. "Much more ongoing learning and continuous adaptation is needed today. Companies aren't interested in the old, two-day training of top executives. They want someone who understands their marketing needs or organizational needs, for example, and can work with them to get them where they want to go."

The shift in focus almost necessitated a change in how Duke handled corporate education. Sheppard saw two options: give the field over to private educational companies like Pearson and management-consulting firms like McKinsey & Company, or create an entirely new structure that could grow and change with the industry. In his mind, the first choice wasn't an option.

" We had built a really neat thing with our corporate-education program--it was a fairly precious jewel to the business school. It would be an irresponsible act to let that asset wilt and atrophy," he says. "As long as the program was a modest size, it could co-exist with the university culture. But if it grew the way we wanted it to grow, it could put that culture and everything that we have built around it over the years at risk."

Fuqua faculty members were well aware of the risks posed by the corporate education program, according to Dean Douglas Breeden. Professors feared losing a balance between theoretical research and practical applications if executive training and the money it brought in became a primary focus for the business school, he says. So they were willing to go along with the Duke CE experiment.

By moving outside the university's walls, the company was able to draw on other resources and try out new teaching methods, Sheppard says. For example, the company built a database of more than 1,200 business-school professors, former executives, and consultants across the globe who can teach courses to thousands of people on several continents--providing flexibility that Harvard University, the Wharton School of Business, and other competitors aren't able to match.