The Reinvention of the MBA from The Economist
Following the release of their 2019 ranking of full-time MBA programs, The Economist took a closer look at the management education and business landscape. Overall, there are signs of a shift in the U.S. towards “new capitalism”—instead of just focusing on profits, young professionals are expected to look at the public good, and they desire workplaces that reflect their values and purpose. This evolution in consciousness impacts the responsibility of business schools, particularly MBA programs. As William Boulding, dean of the Duke Fuqua School of Business, told The Economist, “We need our students to be thoughtful about the role of business in society, particularly at a moment in time when capitalism is coming under attack.”
But social enterprise isn’t the only idea impacting business schools. In general, interest in U.S. MBA programs has decreased in recent years. According to the Graduate Management Admission Council (GMAC), American MBA programs received 7 percent fewer applications this year. And there are a number of reasons for this:
- America’s anti-immigrant sentiment is scaring off international applicants.
- Increasing tuition costs are saddling graduates with large debts that they do not wish to accrue.
- A booming economy means the opportunity cost of forgoing two years of salary is extremely high.
- International programs, which are often more affordable, are improving their offerings and becoming more competitive with the top U.S.-based programs.
According to Geoffrey Garrett, dean of The Wharton School, he believes the resulting “flight to quality” actually benefits top institutions, including Wharton. Candidates are now even more interested in top-notch programs because they offer the best opportunity to recoup their investment in a few years. As noted in The Economist, “the average base salary for graduates of the five American schools with the highest earning potential was $139,000.” Moreover, consultancies, financial firms and tech companies are still hungry for elite MBA graduates—77 to 82 percent of recruiters in those industries plan to recruit MBAs, according to a recent GMAC survey.
However, there’s still a reckoning in the U.S. about the value of an MBA. As part of that, many schools are turning to online education to offer full MBA degrees for less—less cost, less time on campus, less disruption. For example, Questrom at Boston University offers an online MBA degree for just $24,000—a third of the cost of its on-campus program. MIT Sloan is also offering affordable online courses as part of its MicroMasters program.
But it’s not just affordability that’s impacting the American MBA. European schools are focusing more and more on sustainable capitalism, and the U.S. is being forced to keep up by offering more courses on social, environmental, and ethical topics. The courses, “Capitalism and Common Purpose in a World of Differences,” at Duke / Fuqua and “Leadership and Corporate Accountability” at HBS are just a two examples. There’s also a shift toward offering more tech skills, as tech-savvy MBAs are more attractive. Columbia Business School has responded with data, analytics and programming courses to meet the tech needs of their students.
The dean of HBS, Nitin Nohria, maintains faith in the traditional MBA while acknowledging a shrinking market for it. Though online education options, which he says “separate knowing, doing and being,” will proliferate, management education will stay strong—and even, ultimately, be enriched by these changes.
Read the full report in The Economist now.