As someone who has a vintage MBA (from 1981) and has taught MBAs for almost thirty years, I have been spending the last few months wondering about the implications of the market crisis for MBA programs globally. After decades of almost uninterrupted growth in business schools, we are starting to look at not just a mature phase but potentially a phase of decline. Using the same principles that we so blithely recommend that companies facing similar challenges should follow, it is time for action. Knowing how slowly academia moves, I am not hopeful. Here are two of the reasons why I think we should be in crisis mode:
1. The growth in the demand for MBAs has been inextricably linked with the growth in the financial services sector. Many of our incoming MBA student have left good jobs as engineers, salespeople or analysts to come back to business school, in order to make the transition to the richer pastures of investment banking. Those pastures are not only looking smaller and less attractive now than they used to be but are likely to stay that way for an extended period.
2. As teachers at business schools, it looks like we failed the test. After all, some of our best students were at the helm of the institutions that drove us off the cliff. While the rationalization that is offered by many of my colleagues is that these individuals were ignoring what they were taught in business schools, there are other influential voices that are arguing that it is what they were taught at schools that caused the collapse.
Here is what I think we need to do:
1. Prepare for much less demand for MBAs looking forward. This has implications for people who are thinking of or are in Phd programs right now, who will be going into a smaller market.
2. We need to incorporate what this crisis has taught us into how we approach whatever we teach. We do not need to over react and throw first principles out, but this is not the time for defensiveness.
3. As individual faculty , we have to think far more seriously about what competitive advantages we have over the hundreds of others who teach the same subject. If all we are doing is delivering a standard product from a pre-set template, why should someone pay tens of thousands of dollars for that product?