An
article in the Economist states that “the master of business administration is
one of the success stories of our time. Since it was first offered by Harvard
Business School in 1908, the MBA’s rise has seemed to be unstoppable. Having
conquered America, it reached Europe’s shores in 1957 when INSEAD, a French
school, launched a programme. In the past couple of decades, Asia, South
America and Africa have succumbed. Today, it is the second most popular
postgraduate degree in America, after a postgraduate degree in education.”
Whether
a fan, or not, of the MBA many may be surprised by just how long ago this
postgraduate degree was first offered and be intrigued by its success over the
years – since as a ‘brand’ it has had phenomenal success over the last 100
years.
The
Economist article goes on to highlight how “whereas 40 years ago, American
colleges graduated similar numbers of lawyers and MBAs, nowadays nearly four
times as many students pass out with a business-school master’s degree than
with a law-school one. Although demand among Americans (for MBAs) is
plateauing, the slack has been taken up by emerging markets, particularly in
Asia. India now has around 2,000 business schools, more than any other country.
China has fewer, but their numbers are growing quickly. It has an estimated 250
MBA programmes, graduating about 30,000 students each year, which is less than
half the number it is predicted it will need over the next decade.”
The
problem with growth of programmes like this is that, as the number of MBAs
increase, recognition and quality of the programme starts to decline – whether
this is just a perception or a fact hasn’t been substantiated yet – but in
business it’s often perceptions that matters most. So as the numbers of MBAs
increase the exclusivity around this qualification has nowhere to go but down – and when you start finding MBAs out of work
then you have to question what’s happened to the MBA brand over the years.
So
in the post-financial crisis environment MBA students are beginning to question
the return on investment of such expensive programmes; while business schools
claim their graduates are less concerned than they once were about earning
fabulous salaries. Where many Business schools find themselves no longer trumpeting
the number of students who get high-paying jobs in finance, instead reeling off
examples of those who join non-profits or launch social enterprises. While
salaries for MBA graduates have fallen, tuition fees have risen. At Chicago,
the Economists top-ranked Business school, two-year’s tuition costs $112,000
and Harvard’s prices have risen by nearly $25,000 since 2008.
As
with any business environment, as the number of competitors increase, Business
schools have been forced to look at the ‘offerings’ and look for ways to
identify new ‘niche’ markets and identify new areas of competitive advantage.
So it should come as no surprise that “the days in which students study a broad
set of management skills, with little specialisation, is numbered. Most
business schools now encourage students to concentrate on one area, such as
finance; and an increasing number of MBA courses are tailored to particular
industries, such as health care, luxury goods or, in one case, wine and spirit
management. Business schools are expanding in other ways too. University
administrators are wont to view them as cash cows and allow them to graze on
other faculties accordingly. For years, they have been poaching professors from
economics departments. Now they also woo psychologists and sociologists to
teach softer subjects such as leadership and organisational behaviour. And
their scope seems to be expanding.”
Of
course the problem of redefining a product to find that ‘unique’ competitive
advantage can lead to a completely new product that has no bearing on the
original purpose, in this case a ‘broad exposure to business’. ‘Original’ MBAs
always included elements on organisational behaviour and the methods of
learning often encouraged practical leadership, without giving it a specific
title. Also the ‘original’ programmes did allow students to specialise in their
second year or final term (depending whether the programme was being done
part-time or full-time). And further students could specialise when it came to
the choice of their final project and dissertation.
So
‘we’ have to be careful that the current over-commercialisation of the MBA
doesn’t actually lead to the dilution of this once valuable qualification –
where the MBA actually becomes an MSc in some chosen specialisation. This
constant ‘re-branding’ will inevitably lead to confusion in the ‘market’ as
employers may no longer be clear what the MBA actually means in terms of
learning and the skills the graduate will bring to the work place.
The
strength of the MBA used to be that it gave ‘students’ access to fast-track
learning in business principles across the whole functional spectrum of
business – which then, with the ‘right’ employer, could be put to excellent use
in the practical environment to add real sustainable value to the employing
organisation. There is no doubt that this is what the business sector needs and
future MBA programmes mustn’t lose sight of why they were so successful in the
first place and businesses need to demand more from their local Business
schools.
References:
Briefing
Business Education: Change Management. The Economist. 12-18 October, 2013.
P.78.