Toward the future, the business school model will drastically change. Forced by companies and students alike to graduate “doers that think” rather than “thinkers that make do”, schools will soon begin providing programming that is much more akin to hands-on mentorship with industry leaders than the textbook-oriented, spreadsheet-based tooling  widely offered.

This will inevitably mean the demise of the MBA–or at least much of what we know it to be–since it will be recognized that at least two of the MBA’s three value propositions can easily be acquired elsewhere and often for free. The first is the graduate alumni network. Though perhaps formidable in the past, the business alumni network will give way to the continual sophistication of social networking (and the rise of what may soon replace it in the open-source environment). Only a degree from the most elite schools will breed any networking advantage in the future.

The MBA’s second value proposition, that of spreadsheet- and textbook-tooling, is in similar peril. Due, in part, to open-source knowledge and technology, as software ceases to become physically licensed in one location and, as with freeware, available in open-space, spreadsheet software itself will offer tutorials, linked with business experts, sufficient to function at a minimum level within a corporate environment. In any case, ambitious students will obtain (and alert business schools will offer) such skills during undergraduate studies, while other students (e.g. those returning to school) will find certifications and other excellent tooling sources online. The latter could be similar to the first year, Kellogg prep course I have seen offered somewhere.

This leaves only one, unique value proposition for today’s MBA program: business management know-how. Yet despite the claims of many business school PR professionals, many detractors (among them MBA graduates) would claim that most MBA programs fail to provide such know-how. While not necessarily my claim, it would indeed be less controversial to say that the MBA curriculum provides graduates with insights intended to help them work deftly within a business organization. As that graduate begins to become more deeply involved in that business’s management, he or she might recall these insights from his or her education as guide-posts in decision-making.

Yet guide-post decision-making is a hit or miss proposition. The usefulness of such cerebral “suggestions” may be long in coming as a manager works with a business that is struggling with problems completely unrelated to his or her class problem-sets–such as disgruntled employees, rising wages, competition in China, skilled people shortages, internal corruption, and the host of other real issues that fall outside the textbook. As a result, tomorrow’s business school candidates and their employers will demand programming that addresses major and fundamental issues: such as how to compete in China and the emerging global marketplace, how to deal with ratings agencies and analysts when they vilify your firm and how to deal with political threats that impact operations.

Nonetheless, the real demise of the MBA will come as a result of schools simply taking a candid look at the numbers. Most top schools do not make their margins on the MBA but rather do so on Executive and other special programs. By the same token most top faculty prefer to teach in executive-level courses because students bring in as much as they take. The rising cost of the MBA (partly as a result of its low cost-effectiveness for the business school) has debatable ROI and I generally argue to candidates that it is seldom worth paying unless he or she is in a specific circumstance (including, the circumstance that he or she does not have to leave his or her current, corporate position).

What then would replace the MBA? Perhaps something on the order of an “Active Manager (AM)” degree or designation. Its curriculum would be completely modular, as students will want the option of working while undertaking the degree. It will also involve a significant mentorship program using recognized, business leaders. Rather than academic economists (who, in tomorrow’s business school, will be barred from attempting to offer their purely theory-based insights to managers of the real world), these mentors will give AMs the ear of an experienced and successful decision-maker. Moreover, although the AM will be granted a degree, his or her education will not cease upon graduation; rather active management education will continue throughout his or her career through special courses and seminars along with continued mentorship and leadership that he or she passes on.

This dramatic change in business schools will be stimulated, in large part, by a correspondingly dramatic change in how corporations are structured and run. Thus, in the next installment to this series, we will see the nature, source and manifestation of this change and how it, indeed, will produce the mentors for our AMs in tomorrow’s business school…

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About the Author Maurice Ewing, PhD

I help companies develop, implement, utilize and oversee analytical tools that help managers make risky decisions (i.e., risk-based decision analytics). For example, I have helped companies score and rate their customers, suppliers, borrowers and even their own employees' performance. Prior to founding RiskKnowledge (previously, "Conquer Risk/EMRA"), I taught Executive MBAs for several years at Kellogg-HKUST and prior to this worked on Wall Street. I am also an adjunct Professor of Executive Education at CIIM, a Harvard Business Review blogger and a contributor to FinanceAsia, Risk Professional and The Wall Street Journal. My PhD and MA are in economics from Princeton and my double-BA is in economics and mathematics from Northwestern. I am also a chartered FRM holder from the Global Association of Risk Professionals.

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