Facing Growing Competition, Business Schools Must Practice What They Teach
As traditional MBA programs face growing competition, from specialized master’s degrees to online certificates, business schools today are responding by practicing what they teach.
Just as they educate the next generation of business leaders about leveraging the changing dynamics of the marketplace, business schools must apply this same tactic to become more responsive to the needs and demands of their consumers—the 275,000 students enrolled in approximately nearly 519 AACSB-accredited business schools across the U.S. The more willing business schools are to adapt and respond to marketplace demands, the better able they’ll be to fend off attempts by startups that seek to disrupt, if not replace, traditional institutions.
The good news is that demand for education broadly remains high, and business education continues to dominate student choice, as seen in 50 percent growth in those earning MBAs in the last decade. In an increasingly complex world, being successful requires more education, not less. One often-quoted view is that 65 percent of primary school students today will end up in jobs that haven’t been invented yet.
The MBA value proposition is moving beyond discussions within higher education, and is capturing more attention in mainstream business media. The Economist, citing Graduate Management Admission Council® (GMAC) statistics, reported that “interest in the full-time variety [of MBA programs] has waned markedly in recent years.” The magazine’s conclusion: “a fresh case study on the MBA may be in the making.” AACSB, meanwhile, recently laid out a five-year strategic plan focused on developing a closer connection between business and academia. They recognize that business schools are catalysts for innovation, but there is opportunity for more—this requires partnerships with business, but also connecting across universities.
For many business school candidates, quitting their jobs to enroll in full-time programs does not make economic sense if their salaries are not likely to rise appreciably upon receiving their MBA degree. Out of this challenge developed creative new programs and opportunities like the University of Illinois iMBA program. Currently 270 students from 23 countries have been accepted into the online program, often drawn in by the partially free courses and the new online MBA experience.
In order to realign the value proposition of an MBA, business schools must work within and outside the education community. This includes more collaboration with businesses that not only recruit from MBA programs but also tap these higher education resources to elevate the skills and competencies of their current and future leaders.
Within my own institution, Northwestern University’s Kellogg School of Management, and other business schools as well, our compelling purpose to educate and equip the next generation of business leaders gives us hope and momentum. We have had a long-held belief that “one size” does not fit all. This portfolio approach has allowed us to have several different programs for students, for example our one-year MBA, two-year MBA, JD-MBA, and Executive MBA programs. Now power is shifting to the students, who are seeking more options. They expect greater customization in the learning experience—perhaps even to the point that, one day, business schools will have access to data and insights into students’ needs as much as, say, Amazon does when it comes to their consuming tastes.
To become more responsive to student demands, schools are experimenting with alternative credentials, from certificate programs (Northwestern offers several, including in business analytics, human resources, finance, and leadership and management, among others), to Harvard University’s HBX online education initiative.
Most significant, we have arrived on the doorstep of the on-demand economy: instant access to goods and services, tailored to individual needs. In education, greater mobility and connectivity also mean that studying and learning can happen everywhere. Across the board, business schools must consider where, when, and how MBA and other business curricula are delivered. In other words, is school still a place?
There are many reasons to be optimistic about the enduring power of a business education. But enhancing that value will require innovation on the part of business schools, along with experimentation and risk-taking. The institutions that stand the best chance of success will be those that listen to the market, especially when it comes to developing innovative curricula. The winners will be those that explore a variety of program delivery options (online, classroom, and blended) to better serve students.
Innovation in higher education is crucial—to the point of being a prerequisite for survival. Just as we teach future entrepreneurs to “think big, start small, and scale fast,” business schools need to embrace this thinking and make it part of their strategies for remaining relevant in an increasingly competitive landscape.
This article was originally published on LinkedIn.