The Future in The Management World
Business schools are positioned on increasingly unsteady—and unpopular—ground. Business schools are poised to take advantage of exciting opportunities to cooperate and innovate. To examine the evolving MBA marketplace and its threats as well as possibilities for improvement and growth can be the ongoing mantra. Taking a hard look at their value propositions of the MBA schools should also be undertaken. Will the security come with MBA? High-paying jobs are no longer guaranteed to graduates, and the opportunity costs of two years of training especially for those who still hold jobs and are not looking to change fields.
Gaps and opportunities in MBA education
To celebrate the 100th anniversary of Harvard Business School in 2008, we convened a number of colloquia and workshops.
Declines in the order of 25-, 30-, even 50-percent at highly-ranked schools outside the top 15 or so schools in full time programs is a big surprise.
Prospective applicants were being discouraged by many employers from going to full-time MBA programs, that part-time MBA, executive MBA, and other masters programs were seen as attractive substitutes, and that the students who came were not as engaged with the academic curriculum.
In every interview, deans and executives returned repeatedly to that question, as well as to a large set of unmet needs that they identified in areas such as leadership development, skill at critical, creative, and integrative thinking, and understanding organizational realities.
Some schools launched programs that incorporated flexible curriculums, courses in creative or integrative thinking, or experiential learning and project work.
MBA graduates increasingly need to be more effective:
They need to have a global mindset,
Faculty could be expanded in creative ways.
Think of Harvard Medical School. It has incoming classes of 165 students and 10,000 faculties!
It's an astonishing number that makes sense only after you realize. Training might come initially through the collective work of multiple business schools, with cohorts of alumni who receive a short dose of either functional knowledge or research skills or teaching training, or some combination of the three. Schools need to experiment to see what works best for them.
The single strongest theme we heard in our interviews was the need for MBA students to cultivate greater self-awareness. Executives said, "The more an MBA understands his or her impact on others and vice-versa, the more effective he or she will be."
Executives and deans said that MBAs need to develop cultural intelligence, specifically a better understanding of which practices, strategies, and behaviors are universal and which are contingent..
MBAs need to understand what it means to be a general manager in a global world and the differences in institutions, norms, cultures, and legal frameworks.
The numbers—at least before the recent financial crisis—have remained consistently high. In 2006, for example, 52 percent of Chicago Booth graduates took jobs in financial services and 22 percent took jobs in consulting; 42 percent of Harvard graduates took jobs in financial services and 22 percent took jobs in consulting; and 46 percent of Yale graduates took jobs in financial services and 15 percent took jobs in consulting.13 The boom in jobs in financial services and consulting during the last ten years made obtaining a prestigious MBA degree—long viewed as essential to gaining entry to these careers—a very attractive option. Even if one had previously worked in the industry, an MBA from a high-ranking school was, for many years, a de facto requirement for climbing the ladder.
The problem for the higher-ranking business schools is that there are a number of forces at work that threaten to undermine or reduce the opportunities for employment in financial services and consulting. Post-crisis, many lucrative jobs in financial services, and to a lesser extent in consulting, have simply disappeared.
The same point was made by a senior partner in a consulting firm, who, when asked pointedly if he would advise a highly successful junior person with several years at the firm who was intent on a career in consulting whether an MBA would be valuable for his future, answered, "Definitely not."
In the past, deans and business school faculty had a ready response to questions about the value of the MBA degree. Before the crisis, a managing director at one large investment bank noted that his firm still hired 300 to 400 MBAs per year but only about fifty technical experts with PhDs or comparable degrees, even though it set out each year to hire twice as many.
The investment banking industry needs to recruit more technically competent people than it did in the past because our products, and the industry as a whole, are more complex. The requirements are higher than even the most quantitative MBA programs can deliver. As a result, we are aggressively pursuing PhDs in business, finance, mathematics, physics, and operations. The common thread is that all are people who are highly analytical and can translate complex situations into mathematical models. The percentage of MBAs that we hire will go down in the next ten years.
In the past, deans and business school faculty had a ready response to questions about the value of the MBA degree: graduate business training was a way of getting ahead of the pack and igniting one's career. MBAs, the argument ran, were a breed apart and were more likely to be placed on the fast track. They might not be the best technicians, but their breadth of training and skills would win out over the long haul.
Although this may still be true in some fields, it appears to be less true in others. At least before the crisis, for those in financial services wishing to accelerate their careers (i.e., who hoped to stay in the same function or area and get promoted more rapidly or frequently at the same company), the two-year, full-time MBA was no longer viewed as necessary. Both the head of a leading hedge fund and a senior executive at a leading investment bank made much the same point:
Business schools are positioned on increasingly unsteady—and unpopular—ground. Business schools are poised to take advantage of exciting opportunities to cooperate and innovate. To examine the evolving MBA marketplace and its threats as well as possibilities for improvement and growth can be the ongoing mantra. Taking a hard look at their value propositions of the MBA schools should also be undertaken. Will the security come with MBA? High-paying jobs are no longer guaranteed to graduates, and the opportunity costs of two years of training especially for those who still hold jobs and are not looking to change fields.
Gaps and opportunities in MBA education
To celebrate the 100th anniversary of Harvard Business School in 2008, we convened a number of colloquia and workshops.
Declines in the order of 25-, 30-, even 50-percent at highly-ranked schools outside the top 15 or so schools in full time programs is a big surprise.
Prospective applicants were being discouraged by many employers from going to full-time MBA programs, that part-time MBA, executive MBA, and other masters programs were seen as attractive substitutes, and that the students who came were not as engaged with the academic curriculum.
In every interview, deans and executives returned repeatedly to that question, as well as to a large set of unmet needs that they identified in areas such as leadership development, skill at critical, creative, and integrative thinking, and understanding organizational realities.
Some schools launched programs that incorporated flexible curriculums, courses in creative or integrative thinking, or experiential learning and project work.
MBA graduates increasingly need to be more effective:
They need to have a global mindset,
Faculty could be expanded in creative ways.
Think of Harvard Medical School. It has incoming classes of 165 students and 10,000 faculties!
It's an astonishing number that makes sense only after you realize. Training might come initially through the collective work of multiple business schools, with cohorts of alumni who receive a short dose of either functional knowledge or research skills or teaching training, or some combination of the three. Schools need to experiment to see what works best for them.
The single strongest theme we heard in our interviews was the need for MBA students to cultivate greater self-awareness. Executives said, "The more an MBA understands his or her impact on others and vice-versa, the more effective he or she will be."
Executives and deans said that MBAs need to develop cultural intelligence, specifically a better understanding of which practices, strategies, and behaviors are universal and which are contingent..
MBAs need to understand what it means to be a general manager in a global world and the differences in institutions, norms, cultures, and legal frameworks.
The numbers—at least before the recent financial crisis—have remained consistently high. In 2006, for example, 52 percent of Chicago Booth graduates took jobs in financial services and 22 percent took jobs in consulting; 42 percent of Harvard graduates took jobs in financial services and 22 percent took jobs in consulting; and 46 percent of Yale graduates took jobs in financial services and 15 percent took jobs in consulting.13 The boom in jobs in financial services and consulting during the last ten years made obtaining a prestigious MBA degree—long viewed as essential to gaining entry to these careers—a very attractive option. Even if one had previously worked in the industry, an MBA from a high-ranking school was, for many years, a de facto requirement for climbing the ladder.
The problem for the higher-ranking business schools is that there are a number of forces at work that threaten to undermine or reduce the opportunities for employment in financial services and consulting. Post-crisis, many lucrative jobs in financial services, and to a lesser extent in consulting, have simply disappeared.
The same point was made by a senior partner in a consulting firm, who, when asked pointedly if he would advise a highly successful junior person with several years at the firm who was intent on a career in consulting whether an MBA would be valuable for his future, answered, "Definitely not."
In the past, deans and business school faculty had a ready response to questions about the value of the MBA degree. Before the crisis, a managing director at one large investment bank noted that his firm still hired 300 to 400 MBAs per year but only about fifty technical experts with PhDs or comparable degrees, even though it set out each year to hire twice as many.
The investment banking industry needs to recruit more technically competent people than it did in the past because our products, and the industry as a whole, are more complex. The requirements are higher than even the most quantitative MBA programs can deliver. As a result, we are aggressively pursuing PhDs in business, finance, mathematics, physics, and operations. The common thread is that all are people who are highly analytical and can translate complex situations into mathematical models. The percentage of MBAs that we hire will go down in the next ten years.
In the past, deans and business school faculty had a ready response to questions about the value of the MBA degree: graduate business training was a way of getting ahead of the pack and igniting one's career. MBAs, the argument ran, were a breed apart and were more likely to be placed on the fast track. They might not be the best technicians, but their breadth of training and skills would win out over the long haul.
Although this may still be true in some fields, it appears to be less true in others. At least before the crisis, for those in financial services wishing to accelerate their careers (i.e., who hoped to stay in the same function or area and get promoted more rapidly or frequently at the same company), the two-year, full-time MBA was no longer viewed as necessary. Both the head of a leading hedge fund and a senior executive at a leading investment bank made much the same point: