The End of the Homogenous MBA: New and Different Roles for Business Schools
It is an exciting time for business education. For most of the past half century the reputations of American business schools have been defined largely by their MBA programs. Ironically, over this same period MBA programs have converged to the point where they differ very little in curriculum or program design. But I believe this is about to change. Evolving recruiter needs, shifting student preferences and advancing technological capabilities are spurring an unprecedented level of innovation and differentiation in business schools.
“But wait,” you may be thinking. “Isn’t homogeneity of MBA programs the result of schools copying each other’s best practices and therefore a mechanism for bringing the best education to all students?”
I don’t think so. And the reason is simple: Students are different. They have different learning styles, career goals and life priorities. There is no more reason to believe that a single one-size-fits-all approach to business education should meet the individual needs of students than that they should prefer the same flavor of ice cream.
Why then have MBA programs emulated each other so closely? There are multiple reasons, including faculty moving between institutions, schools hiring faculty reviewers from other schools, faculty using one another’s educational materials, and so on. But an important and insidious reason for the copycat behavior is the rankings. All major rankings of MBA programs are premised on the flawed assumption of one-size-fits-all education. They provide a single ranking for all students and hence the implicit message that the top-ranked school is best for everyone. But this is an assumption, not a conclusion of the program comparisons. Nevertheless, students largely act as if it is true because rankings influence the resumé value of their degrees. Consequently, business schools feel enormous pressure to imitate higher ranked schools in hopes of improving their place in the pecking order. The more MBA programs conform with one another, the more they become differentiated only by resumé value, and hence by ranking. The result is that the rankings have increasingly made their one-size-fits-all assumption into a reality. And this, in turn, has steadily reduced the incentive for schools to tailor their education to meet the individual needs of students.
But a series of trends—which have prompted the recent flurry of articles predicting the death of the MBA—are actually beginning to counteract this homogenization process. First, facing pressures to control costs, some employers have shifted to hiring BBAs or even non-business graduates to fill roles formerly reserved for MBAs. Second, as increases in tuition have outpaced increases in starting salaries, the ROI for an MBA degree, while still decidedly positive for many students, has declined. Third, reluctant to leave their jobs to pursue a degree of diminished value, some prospective students have chosen to forego the MBA, while others have turned to part-time, online, and other ways to build their skills without returning to school.
The combined effect is that demand for the traditional, full-time MBA has softened significantly in recent years. To compete for a piece of the smaller MBA pie, schools have to offer something special. To expand the business education pie beyond the MBA, schools need to offer something different. This is spurring a level of innovation, and differentiation, that we haven’t seen in decades.
New types of experiential learning activities are now emerging within MBA programs. For example, the Ross School of Business at the University of Michigan has launched the REAL (Ross Experiences in Action-Based Learning) program, in which students learn by taking on accountable roles to start, advise, invest in and lead actual businesses. Real-world educational initiatives like these rely on very specific academic/industry partnerships and are therefore creating distinctive experiences for students that differentiate MBA programs in ways that variations, such as differences in core Finance and Marketing courses, never have.
MBA program innovation is also being enabled by new technologies. For example, in my own classes, I now leave communication of background information and development of basic skills to my digital avatar in online learning modules. This has opened up class time for engaged activities, such as simulations, competitions and debates. As such, digital education serves to complement and amplify experiential learning. Digital technologies also offer options for serving new student populations. At Ross, we launched an Online MBA this year that makes use of asynchronous, synchronous and residential experiences to create a premium MBA experience for students who don’t want to disrupt their careers and family lives to come back to school. Other business schools are making use of digital technologies to bring industry speakers from around the world to their residential students or to facilitate simulations and role-playing exercises. The lack of established standards is freeing up programs to create unique and distinctive learning experiences in the digital space.
The innovations spurred by the softening of the MBA market also extend to business education beyond the MBA. For example, at Ross we have introduced a Master of Management (MM) degree to serve pre-experience non-business graduates. This one-year program helps liberal arts, social science and other college graduates pivot to business-related careers. Other business schools are offering specialized master’s degrees in business analytics, finance, supply chain management, health care management and other emerging fields to better serve the needs of specific sets of students. Some schools have gone so far as to eliminate their MBA in favor of these more narrowly focused programs. Because they target distinct student segments, specialty master’s programs are an important way in which business schools are seeking to differentiate themselves in the eyes of students and employers.
Some business schools have used digital technology to take student targeting even further by unbundling the content of traditional degree programs and creating alternate credentials. Some examples include a Coursera Specialization on leadership offered by Michigan Ross, a MicroMasters program on supply chain management offered by MIT and a Credential of Readiness on business fundamentals offered by the Harvard Business School. Other schools are offering a wide range of non-degree programs and credentials aimed at meeting students’ individual needs.
The combination of new business specialties, delivery mechanisms and academic credentials has vastly expanded the set of business program design options. It is now possible to deliver high-quality business education in cohort or self-study modes, in residential or distance formats, via up-front degree programs or credentials spread over a career, with a general or specialized curriculum, through learning by working in industry or learning by role playing in simulations, and many other distinctive ways. This enormous array of possible forms for business education presents a huge opportunity for differentiation. At the same time, the softening of the MBA market offers a powerful incentive for business schools to differentiate in order to attract new types of students. This alignment makes it unlikely that business schools will continue to copy one another as closely as they have for the past half century. Instead, we are likely to see highly differentiated business education aimed at student segments that range from entrepreneurs in developing countries trying to launch local startups to retiring executives of multinational corporations seeking to leverage their experience in the non-profit sector.
The result will be more and better options for students, a broader range of candidates for employers, and richer challenges for educators. It is an exciting time for business education.
Author Perspective: Administrator