Published on 2020/03/03

The EvoLLLution | Disruptive Innovation Goes to Business School: Is the MBA Dead?
Though the market for MBAs is challenging, universities can adapt to the shifting market conditions by applying the concepts of disruptive innovation and staying aligned with demand and need.

Management education has changed significantly over the last few decades (Batista, 2019). In particular, MBA degrees are being revamped in a bid to ensure they stay relevant in the 21st century. Among other factors, there is an increased focus on modern workplace issues such as entrepreneurship, sustainability and corporate social responsibility, as well as changes to the way information is delivered (Lauren, 2018). There is little doubt that business schools are facing challenges to be relevant and competitive, given the enrollment decline for most MBA programs. This paper addresses the forces impacting MBA programs, strategies for disrupting MBA programs through innovation and rethinking the role of the MBA.

We therefore ask, does disruptive innovation apply to the MBA space? O’Reilly & Binns (2019) posited that facing imminent disruption, many large, established firms have embraced innovation as a way to develop new growth businesses. To succeed in the face of disruptive change requires established firms to master three distinct disciplines: ideation, to generate potential new business ideas; incubation, to validate these ideas in the market; and scaling, to reallocate the assets and capabilities needed to grow the new business.

After more than three decades of surging enrollment in MBA programs and a fourfold increase in degrees awarded annually, some business leaders and university officials are wondering if the credential has peaked (Selingo, 2018). Some argue the MBA is dead if it costs $50,000 to $100,000, but not dead if it comes at a reasonable price, with high ROI and flexible models. Harvard Business School Prof. Clayton Christensen has predicted that 50 percent of colleges and universities will close or go bankrupt in the next decade and further stated “a host of struggling colleges and universities will disappear or merge in the next 10 to 15 years” (Horn, 2018).

How has disruptive innovation created success? Western Governors University (WGU) has pioneered the use of online competency-based education (CBE). The College of Business has leveraged CBE to scale the MBA program, which now serves over 8,000 students. In light of the decline in MBA enrollments in many parts of the world, this paper examines a new model of MBA education and its implications as a disruptive or redemptive force.

Rethinking the Role of the MBA

As Horn et al. have highlighted, the institutions that will flourish are the ones that provide affordable education and are accessible and convenient for people who would otherwise have no educational option (Horn, 2018).

Since its inception, WGU has aimed to serve learners otherwise shut out of the traditional system. Now, the groundbreaking institution has both graduated 110,000 students and has over 110,000 students currently enrolled (Dunagan & Clayton Christensen Institute for Disruptive, 2018). These achievements demonstrate WGU’s ability to scale its high-quality, low-cost model, signaling a momentous shift in the higher education landscape.

WGU particularly targets underserved students and prides itself that approximately 71 percent of its student body come from one or more of these categories: minorities, rural, low-income, and first-generation college students. These students now have access to high-quality, affordable, accredited and relevant higher education including an MBA. In critically reviewing the cost of the MBA globally, WGU offers a value-proposition that resulted through thoughtful innovative disruption.

There have been warning signs for many years about the MBA. Political, economic and other factors have been influencing potential MBA students about their decision to pursue an MBA. Regardless of the respective trends, the MBA continues to be strong and relevant but needs the reinvention allowing access to potential students.

One of the predictions is that many academic institutions will close campus locations and individual programs—such as full-time MBA programs and law schools—while the institution will remain open (Horn, 2018). Agile colleges will likely grow at the expense of those that fail. And yes, there will be some disruptors that grow significantly. One of these disruptors has been WGU.

How is the MBA Being Disrupted and Why?

There are several key ways in which the MBA is being disrupted. These include offering an Online MBA, addressing cost, accessibility, relevance of course content, support for students and career support. The number of online MBA programs has increased in recent years while the demand is stabilizing. In light of this trend, the pricing of online MBA programs is an important issue for university administrators and policy makers, who are concerned about program competitiveness and public access to higher education (Estelami & Mao, 2019).

There are some concerns among business educators about whether they can respond to the market and the needs of students quickly enough, and how much they can change without losing identity or purpose. There are questions surrounding long-standing programs, what content they should deliver online, and how much they should embrace experiential learning. Employers are also demanding changes to curriculum and involvement.

Students have options as to the platforms in which they take courses. There are more third-party companies that can deliver content in virtual formats. Companies such as 2U, Coursera and Udacity are options for universities and students to utilize as a means of accessing the courses and programs at a significantly lower cost.

Business schools don’t always have consistent processes in place for regular curriculum review, and when they do conduct reviews, it’s often at the last minute. That’s why the MBA Roundtable has started a new workshop on curriculum review processes and practices—how to get data points from alumni, from recruiters and from your current and prospective students (“Catching Up to Change,” 2018). The point is that curriculum has to be an inclusive approach with input from employers, students, faculty, administrators and all other stakeholder groups.

What are the future scenarios of the MBA?

An MBA is all about career advancement (DeMuth, 2019). Is there still a demand for the MBA? Do employers still value the MBA? “The MBA is still without question the most highly regarded, valued business credential in the market” (DeMuth, 2019). There is little doubt applications to full-time, two-year MBA programs have declined for five consecutive years (Byrne, 2019). More schools are shuttering their MBA offerings and actual enrollment in many more programs has fallen. But there is another surprising side to this story: MBA demand is also exploding (Byrne, 2019).

Cost of MBAs

Cost is a major point of differentiation, as the evidence is suggesting. For example, the University of Illinois’ Online MBA program at the Gies College of Business has seen enrollment grow to more than 2,500 MBA degree-seeking students this fall, from a debut cohort of just 114 students three and a half years ago. WGU continues to grow and has more than 8,000 in various graduate business programs. Boston University launched its Online MBA and received more than 600 applications in the first few weeks.

Microcredentials

Microcredential programs are viewed by many as the next evolution of executive education, providing learning options for busy executives who want to learn but don’t have the time, resources or ambition for a full  MBA (Fister Gale, 2018). Several institutions around the country have developed or are in the process of developing microcredentials including WGU where students can earn credits in a functional area that could be used towards a degree program.

Innovation

MBA programs can create competitive advantages through Massive Online Open Courses (MOOC), business analytics, specialized graduate degrees, partnerships with industry and using platforms such as Coursera.

Conclusions and Recommendations

“Harvard Business School Prof. Clayton Christensen says that half are bound for bankruptcy in the next few decades” (Hess, 2018). While such comment has some legitimacy, there have been concerns about MBA programs for many years. While these concerns linger, MBA programs are finding ways to survive and be relevant. At the same time, if radical changes are not made to allow access and ensure programs are affordable and relevant to industry needs, and institutions find ways to change people’s lives, then universities and programs will not survive.

For business professionals globally, the concept of microcredentialing is appealing. The global market is prime for such innovation in graduate business education. Models of collaboration among faculty from different institutions to offer programs can be used to leverage different markets and scale programs.

The healthcare industry has faced its share of challenges. As an example, UnitedHealth Group is “committed to helping people live healthier lives and helping make the health system work better for everyone” (UHG, 2019). UHG had been disrupting the healthcare industry and continuing to develop forward-thinking solutions for a modernized health care system that address the health care challenges facing our nation and reflect our core health care reform principles.

Similarly, academic institutions can achieve success through disruptive innovation, rethinking the role of the MBA and being highly innovative.

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References

Batista, E. D. (2019). Should You Get an MBA? Harvard Business Review, 44-45.

Byrne, J. (2019). Where MBA Demand Is Exploding Forbes, September.

Catching Up to Change. (2018). In (Vol. 17, pp. 1): AACSB International.

DeMuth, M. A. (2019). Mastering the Future: MBA graduates are better prepared than ever for tomorrow’s business challenges. Georgia Trend, 34(9), 34.

Dunagan, A., & Clayton Christensen Institute for Disruptive, I. (2018). Aligning the Business Model of College with Student Needs: How WGU Is Disrupting Higher Education. Retrieved from https://postu.idm.oclc.org/login?auth=prodbb&url=http://search.ebscohost.com/login.aspx?direct=true&db=eric&AN=ED593252&site=ehost-live&scope=site

Estelami, H., & Mao, Z. (2019). An Exploratory Study of the Determinants of Tuition for Online MBA Programs. American Journal of Business Education, 12(1), 1-9.

Fister Gale, S. (2018). BEYOND THE MBA. Chief Learning Officer, 17(6), 42.

Hess, A. (2018). Half of American colleges will be bankrupt in 10 to 15 years. CNBC.

Horn, M. (2018). Will Half Of All Colleges Really Close In The Next Decade? . Forbes, December.

Lauren, A. (2018). Reinventing the MBA for the future. In (pp. 52): News Limited Australia.

O’Reilly, C., & Binns, A. J. M. (2019). The Three Stages of Disruptive Innovation: Idea Generation, Incubation, and Scaling. California Management Review, 61(3), 49-71. doi:10.1177/0008125619841878

Selingo, J. (2018). MBA Enrollment is Down Again. What’s the future of the degree? The Washington Post.

 

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