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When Ariwoola Ogbemi decided she wanted to study for a top-notch MBA a decade ago, she ruled out the two-year US model because she had a young family and could not spare the time.
“I knew two years wouldn’t work,” says the former head of the information technology department at Statoil Nigeria, the energy company. Instead, in 2003, she began the one-year MBA at IMD in Switzerland – a course she chose for its international focus as well as its duration.
Ogbemi is typical of a growing number of business school students who, because of the cost, time commitment or career trajectory, are eschewing the traditional two-year MBA model for one-year, part-time or executive programmes, or shorter specialised masters degrees in finance or accounting.
Enthusiasm for the MBA is greater than at any time since 2008, but the two-year MBA, though still the gold standard of the business school world, is coming under increasing pressure as the market for business credentials fragments.
Even those who opt for a traditional MBA no longer see the degree as the traditional route into a career in investment banking or management consulting.
The impetus for change is coming from students themselves, says Rich Lyons, dean of the Haas school at the University of California, Berkeley. “You look at 200 MBAs and you get 200 different job aspirations. It is a good thing that schools are accommodating graduate needs.”
There is no better illustration of this than at Harvard Business School, where in 2013 just 5 per cent of graduates took up a job in investment banking – half the number of those who went into venture capital, private equity or leveraged buyouts. What is more, at $150,000, the starting salaries for those in the latter three sectors were 50 per cent higher than those in investment banking.
In 2013, salaries offered to graduates from the top-ranked schools showed a marked improvement. For the first time, those reported by European schools began to close on those reported from the US.
At Harvard Business School – traditionally one of the chart-toppers for post-MBA salaries – the median starting salary for 2013 graduates was $120,000, not including sign-on or other bonuses.
At London Business School, the mean starting salary was just below $114,000 in 2013, and just 29 per cent of LBS students went into finance, compared with 42 per cent in 2006.
Fiona Sandford, executive director of global business and careers at London Business School, says the big story is the growth in corporate sectors such as media and telecoms.
“The perceived wisdom is that if you rely on the corporate sector, you wouldn’t get the pay,” she says. “That is not the case.”
As with all the top US schools, LBS’s MBA is a two-year programme, a format that has staunch defenders, in particular because of the summer internship. At the Wharton School at the University of Pennsylvania, more than 50 per cent of MBAs are there to switch careers, says dean Tom Robertson. “You need the summer internship for career switchers,” he says.
This did not worry Ogbemi, who is now managing director of Statoil Nigeria. She discarded the idea of an internship because she knew she wanted to return to the oil and gas sector.
“Oil and gas is such a big part of the Nigerian economy,” she says, adding that for her the one-year format was “just ideal”.
Though the one-year MBA started life in Europe, the model is growing in significance in India, says Ashish Nanda, recently appointed director of IIMA – the Indian Institute of Management, Ahmedabad – the highest-ranked of three Indian business schools in the FT MBA rankings in 2014. He says the one-year course will gain in recognition and will be more attractive for overseas students than a two-year degree.
It has taken half a century for the one-year degree to establish its credibility, but a more contemporary threat is the advance of online technology, which has enabled online courses to be offered at lower cost or even free of charge.
The top business schools are leading the charge. Wharton, for example, has put several of its core courses online, but they do not constitute a degree, insists Prof Robertson. “It is not the total experience of the MBA; it is not the total course,” he says.
He describes the move as a “great experiment” that could ring changes to the campus-based full-time MBA. “Faculty are working potentially to incorporate it in the flipped-classroom model,” he explains. In this scenario students would study online but then participate in classroom analysis and discussion. “It is felt it could lead to greater depth,” Prof Robertson says.
Meanwhile, there is an increased focus in the curriculum on entrepreneurship, with demand coming from today’s MBA students – the so-called millennials – as well as recruiters in large companies and start-ups, says William Boulding, dean of the Fuqua school at Duke University, North Carolina.
“What has changed in a very fundamental way is that big companies want to hire people who are entrepreneurial, who see opportunities in a competitive landscape,” he says.
Entrepreneurship, adds Prof Robertson, is the “new leadership”.