THE BUILD-OUT OF THE BUSINESS SCHOOL INDUSTRY
By Dominic Basulto
Business schools are, quite simply, enormously profitable
businesses. In response to far-reaching changes occurring within the
world economy, clients (students, current managers, and recruiting corporations)
of these B-schools have increasingly challenged the traditional role
of the MBA. This has inspired a remarkable build-out of the B-school
industry, in terms of revenues, new delivery vehicles for revamped program
offerings, and new worldwide locations. Executive education, online
internet delivery, and customized in-house courses for corporate managers
have contributed to unprecedented revenue growth over the most recent
five-year period at leading institutions such as London Business School
(123%), Harvard (124%), Wharton (151%), Kellogg (158%), and MIT Sloan
While the traditional full-time MBA remains the undisputed
first choice of aspiring career managers, the hype and early development
of the New Economy in the USA has meant a wholesale reconsideration
of what the MBA should be. After all, the MBA is merely content that
can be sliced, diced or otherwise configured to meet any demands of
corporations and aspiring managers anywhere in the world.
Three key factors can be isolated in moving the MBA
in new directions: (1) the expansion of the Internet economy and rapid
technological change (2) globalization and (3) the rise of non-traditional
MBA providers. All of these factors give applicants new possibilities
to consider when applying to B-school.
#1: EXPANSION OF THE INTERNET ECONOMY & RAPID TECHNOLOGICAL CHANGE
The expansion of the New Economy and the realization
that :"the Internet changes everything" has forced B-schools
to reconsider their course offerings. The dean of Columbia Business
School remarked that the Internet "is the instrument for democratizing
intellectual capital"- no longer should only the elite have access
to managerial know-how. Moreover, technological advances have meant
that B-schools can grow revenues and employ their assets more efficiently
through a combination of new media and Internet content delivery.
Much as traditional retailing has pushed mainstay
corporations of the Old Economy to shift from "brick and mortar"
to "click and order," so have B-schools been prodded to provide
content over the Internet and via videoconferencing. Wharton has introduced
its Wharton Direct program, which disseminates video and audio links
to coursework via satellite and computer; Duke Fuqua has offered an
online Executive MBA since 1996; and Arizona has pioneered a teleconferencing
program which provides distance learning to Silicon Valley (and also
grants students equity stakes in the telecommunications company providing
B-schools have recognized that the New Economy maxim-
"moving at Internet speed" applies just as well to academic
course content. Elite institutions such as Harvard, Wharton, and INSEAD
are expected to remain ahead of the curve, not follow slavishly behind
emerging trends. Such B-schools have revamped course offerings to include
e-commerce savvy. Kellogg now offers a technology and e-commerce major
and Wharton has structured an e-commerce management curriculum, while
other B-schools have moved into short-term executive education courses
taught by young entrepreneurs. Harvard has recently announced its plan
to open a Silicon Valley open-enrollment executive education center
in order to remain close to the heartbeat of the e-commerce era, and
in 1999, Columbia, Chicago, Stanford and London School of Economics
actually partnered with a start-up company, UNext.com, to offer immediate
web distribution of material.
One need only look at the education section of an
international business publication such as The Economist or the Financial
Times to see the broad diffusion and internationalization of B-school
programs, ranging the worldwide spectrum across the USA, Europe, and
Asia. There is no doubt that the business school model has moved beyond
the American and European context. In no small part, technology has
aided this diffusion of the MBA brands abroad. Participants in new regions
often combine on-site meetings and classes with internet-based communication.
These programs are more than merely a "distance learning"
program- they provide constant in-person contact for busy executives
with worldwide travel schedules. London Business School and Columbia
Business School have announced a joint 20-month executive MBA program
(where participants alternate meetings in New York and London) and Duke
Fuqua has announced a new on-site presence in Frankfurt. In an extreme
version of this concept, the Hong Kong-based Internet learning company
NextEd.com has introduced real-time business school content from three
Australian B-schools to the Asian continent.
Of course, student exchange programs between business
schools have existed for quite some time. For instance, students at
London Business School are able to coordinate a semester at one of 30
B-schools on one of four continents. The next step in this development
has been a new dedication to capital expenditure, by the construction
of satellite campuses on different continents. INSEAD has responded
to demand for its European MBA by opening a new campus in Singapore
to attract Asian managers, and U.S. B-schools have mulled over establishing
both European and Asian campuses. Of course, Europe is the biggest market
to crack for US B-schools. Chicago was an early mover, setting up a
campus in Barcelona.
#3: RISE OF NON-TRADITIONAL MBA PROVIDERS
Third parties- "non B-school" B-schools-
have encroached on the formerly sacrosanct territories of traditional
leaders such as Harvard and Wharton. A mix of management consultancies,
think tanks, in-house corporate training programs, and even media companies
such as FT Knowledge (which owns the Financial Times) have branched
into providing MBA content to managers. Fans of Kaplan test preparation
will be heartened by news that Kaplan has introduced plans for an online
MBA by the year 2001. B-schools have been challenged since these third-party
providers can react quicker to a rapidly changing world by putting content
online immediately and by reaching a global audience rather than a limited
cadre in one city.
In the field of executive education, management consultants
and web-based learning companies have proven to be worthy rivals for
the ivory tower academics. In fact, current ratings of executive business
education programs by Business Week now includes private and non-profit
companies in addition to B-schools. How effective are these upstarts?
In the most recent Business Week survey of executive education, only
39% of the respondents indicated that B-schools were the most effective
providers of executive education. Market share has been seized by independent
consultants such as JMW Consultants and the Center for Creative Leadership
(#7 in the rankings). As a counteroffensive, some top B-schools have
spun-off their executive education programs into strictly for-profit
entities (Duke Fuqua has created Duke Corporate Education, Inc. and
Cornell Johnson has created eCornell), with talks of going public via
an IPO. Others have been more sympathetic to customized non-degree executive
education tailored to a specific company's needs.
Traditionally, only high-potential candidates- the
future executive stars- from a corporation would receive dedicated executive
business training. The expansion of program content and timing has meant
the delivery of the MBA product to all layers of the corporation- not
just high-potential future executives. Some leading companies now outsource
in-house training to B-schools willing to structure a unique curriculum.
For instance, the consultancy McKinsey combines an "in-house mini
MBA" with short-term targeted training to junior hires at B-school
campuses in Britain and the USA. Dartmouth Tuck's Business Bridge program,
which seeks to propagate segments from its well-respected two-year MBA
to a mass audience, is part of this trend toward "distributed learning"
to top blue-chip companies.
FINAL ADVICE TO APPLICANTS
Obviously, this move towards e-learning and other
non-traditional approaches to business school education gives potential
students yet more aspects to consider when selecting the "right"
MBA program. B-schools that make efficient use of e-learning can offer
more flexible programs to their students. For example, applicants who
favor a particular B-school for location, reputation, and scholarship
availability, but are dissuaded in applying due to weaknesses in a specific
aspect of the curriculum, can now address this shortcoming by selecting
an "off-the-shelf" solution from one of the new MBA content
providers or investigating advantages of a B-school's partnership with
an international location.
Another important factor is how well one's style of
learning matches that of the B-school to which one is applying. As some
institutions experiment with strictly online, paperless classes (even
INSEAD has now considered web-based content for foreign managers), the
initial acclaim has given way to some dissatisfaction. Without the formal
structure of a real classroom, many participants have not seen the hoped-for
Applicants must also think about how their potential
employers will evaluate non-traditional MBA programs. Some employers,
especially in the high-tech industry, think highly of graduates familiar
with e-learning methods and a concomitant knowledge of e-commerce. An
MBA from a B-school with a progressive reputation gives you also a progressive
reputation. Likewise, having international experience looks great on
a resume for some multinational corporations. However, other employers
may view a year in an exotically-located business school as little more
than a holiday abroad.
Finally, remember that attending B-school is just
as much an investment as buying stock. Before investing considerable
money and time, evaluate the full potential of a particular program.
Many analysts on Wall Street have predicted that online-based e-learning
and short-term targeted executive education programs are the next high-growth
sector. A healthy dose of skepticism is needed: just as some high-tech
start-ups have begun to experience extreme market volatility, so might
some of the new e-learning programs prove to be nothing more than a
flash in the pan. But the very fact that the 800-pound gorilla of the
B-school world - Harvard- has entered the online education wars counts
for something. Much as companies such as Sony or Coca-Cola or Microsoft
benefit from strong brand recognition, so have the best B-schools leveraged
their own brands in order to sell a wide selection of products through
new channels to an ever-increasing consumer base. So shop around- non-traditional
B-school education no longer means non-quality B-school education.
Dominic Basulto is a 1998 graduate of Yale School
of Management and currently works as a consultant for Pericles ABLE
(American Business and Legal Education) in Moscow. Pericles offers a
full MBA advising program.