Sunday, May 25, 2014

What’s the Future for Business Education?

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.
Briefing Business Education: Change Management. The Economist. 12-18 October, 2013. P.78.

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