Degrees of change

Twenty years ago, the MBA was unquestionably the degree of choice for ambitious young managers; these days, the picture is less clear cut, as shifts in the global economy highlight the need for competing types of management education and greater student choice.

While the MBA still dominates the North American degree market, a diverse range of programmes are blossoming in developing economies.

South America is emerging as a non-degree market, with executive education the norm in Brazil. In China, executive or part-time MBAs are the premium programmes. In India, the flagship postgraduate programmes are targeted at those straight out of undergraduate courses.

In the fourth Bric country, Russia, the MBA also takes a back seat, says Valery Katkalo, dean of the Graduate School of Management at St Petersburg State University. “Currently the full-time MBA is not the product delivered by Russian business schools. I do not see a particular demand for [it].”

In Europe, the surge in demand for pre-experience masters in management degrees has overshadowed the MBA, with many established schools seeing a decline in applications. In countries such as Germany, the MBA is still a fledgling product, explains Jens Wüstemann, president of the Mannheim Business School. “Fifteen years ago, the MBA was unknown in Germany. We are trying to educate the market.”

Even in the US, the home of the MBA, fragmentation in the market – or customisation, as deans prefer to call it – is increasing, says David Schmittlein, dean of MIT’s Sloan school and a long-time advocate of programme choice. “There’s been a lot more discussion.”

So, just as the US exported the MBA to Europe 50 years ago, today there is an increasing demand for European-style pre-experience masters in ­management degrees in North America, as well as for specialised degrees in finance, accounting and marketing.

The latest technology has also sent many MBA schools back to the drawing-board. Even the top-ranked schools are acknowledging the changes. “I think people will look at different formats,” says Glenn Hubbard, dean of Columbia Business School in New York. “I think people may want to get an MBA in a slightly different way.”

While every business school is exploring the option of blended learning, in which courses can be either online or based in the classroom, in 2012 all eyes will be on the Kenan-Flagler school at the University of North Carolina at Chapel Hill. In 2011 it launched MBA@UNC, essentially an online MBA, but with the same premium fees as the full-time degree. If successful, it could set the benchmark for other highly ranked schools.

In the scrabble to attract the top students, this kind of differentiation has become the name of the game, says Richard Lyons, dean of the Haas school at UC Berkeley. “Business schools are taking more of a stand and saying, ‘This is what we are about.’ We’re saying this is our identity; this is our history; this is our place. We’re going to play it our way.”

But as the ticket price of an MBA goes up, so does the student demand for high-quality teaching and services. Dave Wilson, president of GMAC, the body that administers the GMAT entry test for business schools, warns of the dangers. “The faculty are a fixed cost, just like the building. There’s a limit to what they can teach,” he says. “Now they have to teach MBAs for medical students or MScs in finance.”

But market-sensitive business schools are learning to embrace the new reality. At IE Business School in Madrid, for example, the 633 full-time MBA students now choose which 80 elective courses will run from the 150 proposed by faculty. “It’s demand driven,” explains strategy professor David Bach.

As numbers on MBA programmes in Europe and the US plateau or decline, business schools everywhere are counting the costs, and fundraising campaigns are squarely back on the agenda as state funding evaporates. But in Asia, different funding models are emerging, such as corporate foundations, to take the place of the state and the wealthy alumnus.

As Nitish Jain, president of the SP Jain Center of Management, points out: “It will be private enterprise that funds Asia’s growth in education.” One example is Cheung Kong Graduate School of Business, which made a splash in 2011 by opening facilities in London, reversing the prevailing trend in which western schools set up programmes in Asia. This year, the Chinese school is planning to start teaching in New York as well.

As established business schools scurry to educate those from different cultures, the curriculum’s focus has moved from the content to the context in which business operates. “What does it mean to put capitalism through the moral filter of Islam?” asks William Boulding, dean of Duke University’s Fuqua School of Business. “We’d better begin to understand that.”

As well as damping the number of MBA applicants, the continued economic uncertainty has brought other changes. Students are now opting for longer programmes. At Esade in Barcelona, where students can complete their MBA in 12, 15 or 18 months, most are eschewing the shortest course. Of the 180 students, only 20 in the class of 2012 will finish their degree in 12 months – the rest are opting to study over a 15- or 18-month period. “What we didn’t expect at all was the [low figures for] 12 months,” says Gloria Batllori, executive director for the MBA.

Oxford University’s Saïd Business School is also tapping into the trend. Peter Tufano, the newly-appointed dean, plans to launch a 1+1 system this year, in which postgraduate students will be able to obtain two degrees in two years, the first a masters in a specialist subject, such as environmental management or education, the second an MBA.

Consumer choice, it seems, will increasingly be the name of the game.

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