January 26, 2014 7:02 pm

Are business schools open to real change?

illustration of a calendar©Nick Lowndes

“I have never seen so much change in all my years as a business school professor,” confided one dean to me at the end of last year. I was about to agree. But then the occasion had a haunting sense of déjà vu about it.

Because it is hard to think of any year in the past 15 when one professor or another has not said the same thing to me. Be it 1999, 2003, 2011 … this was the year that had seen unprecedented change in business schools, they said. But what exactly has changed?

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Certainly for those students on the world’s top 100 MBA programmes, very little at all seems to have changed in the past 15 years – or arguably the past 50. They still take a year or more to apply to business school, they study intensely, usually for two years, and they are taught by professors who have a job for life. They build up an address book to die for, and then they use financial donations to ensure nothing changes, preserving their business school experience for future generations.

The dotcom crisis of 2000, the Enron scandal of 2001 and the subprime meltdown of 2008 all seemed to threaten the reputation and sustainability of business schools, but as we enter 2014, most top schools seem to be in relatively rude health. Will 2014 be the year when everything changes? I am not holding my breath.

What, then, will force change? Only the threat of total annihilation, I suspect. The “great recession” of a few years ago looked like just such a moment, and even the top US business schools trimmed staff, cut back on professorial travel and implemented a hiring freeze, as professors either beat their breasts with soul-rending confessions or hid their heads in the sand and pretended it was nothing to do with them. But, at the end of the day, all this was done to guard against structural change, not to promote it.

Of course, the top 100 MBA programmes as ranked by the FT are the tip of the iceberg, representing just 1 per cent of business schools worldwide. It has been a different story for second-tier schools. As student numbers have dropped, some have closed programmes, while others have sought to improve finances through partnerships with for-profit organisations. But few business schools have really hit the buffers, and because you rarely hear that a school is having problems until the crunch comes, it is hard to know how many schools are slipping into treacherous waters.

What are the challenges to all but the highest-ranking schools? Clearly, Moocs – massive open online courses – which offer business programmes for free, will be the biggest challenge to second- and third-tier fee-paying campus programmes. Why pay fees that are increasing by 4 or 5 per cent a year when you can get an equivalent education for free, without giving up the day job?

One problem for business schools, as opposed to other professional schools such as those for law or medicine, is that you do not need the MBA credential to progress in business. You just need to be good at your job, and the early indications are that Moocs could help ensure this.

In demand

Enrolments on the FT top 100 MBA programmes fell slightly in 2013, though enrolments on the top 10 programmes rose 1 per cent to almost 6,000 – accounting for almost a third of enrolments on the top 100 programmes.

So, in addition to the business knowledge and the credential, what are campus-based MBA students paying for? Top of the list has to be career services – help to get a job. Then there is the network. As part of the FT MBA rankings, we ask alumni to say why they went to business school and to rate their answers. For the ability to change careers alumni gave a rating of eight out of 10, but they placed an even higher importance on networking – it scored 8.3. (See Upfront)

Most of the top schools have extensive alumni networks, but it is an expense that those outside the highest echelons find difficult to afford. They ignore these services at their peril.

Once it comes to a matter of survival, though, business schools in Europe at least have proved they can move rapidly. Fifteen years ago, most students at business schools in Spain and France were taught in Spanish and French. But as students became more global, and English became the lingua franca of business education, business schools in those countries implemented emergency policies to recruit English-speaking professors and persuade incumbents that English had to be the teaching language.

The speed with which the schools moved was impressive, particularly in France where there is strong reverence for the French language. It is hard to envisage such fundamental change occurring in English-speaking countries. It is effectively the equivalent of a dean coming into a business school in the US, the UK, Canada or Australia and declaring that within a decade all classes will be taught in Chinese or Spanish – and then implementing this policy.

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