Elite Deans Defend Value Of MBA Degree
Here is an astounding business school factoid: Some 60% of last year’s graduates of the Harvard Business School took jobs in companies that employed 500 or fewer employees. HBS Dean Nitin Nohria says that fact was “one of the most surprising things that I have learned in the last ten years at Harvard Business School. The large world of recruiting where people would come and make offers to hundreds of students and take them just seems to be a world that is going to become a minority of recruiting,”
Nohria made this observation at a recent gathering at Columbia Business School where the deans of Harvard, Columbia, Wharton and Stanford participated in a pubic discussion on the future of management education. During the hour-long conversation, the deans defended the value of the two-year MBA experience and predicted that the traditional business disciplines that have flourished in silos will became less critical as experiential learning assumes greater importance in MBA programs. They also forecast that technology will forever change how business is taught in business schools and decreasing importance of the traditional major employers of MBA graduates.
It was a rare public gathering of four of the deans of the so-called M7 elite business schools whose leaders often meet privately. The wide-ranging discussion covered everything from the return on investment of the MBA degree to whether it made sense for entrepreneurs to have an MBA education (not surprisingly, the dean took the view that the ROI on an MBA was strong and that an MBA education could give entrepreneurs an advantage). The unusual symposium, held earlier this month, was assembled to commemorate Columbia Business School’s centennial.
COST OF MBA DOESN’T JUSTIFY ‘LEARNING NARROW DISCIPLINES ONE AT A TIME’
Asked if the escalating cost of the MBA degree was worth it, Columbia Business School Dean Glenn Hubbard and HBS Dean Nohria both defended the two-year MBA experience. Nohria said the return on investment on the MBA was about “20% plus” from a leading business school. “Any transaction is about value,” he said. “If you are going to any of the very top business schools, the answer to that question is yes–as long as those schools are delivering an experience that brings the best of what we do in a great university like this with the world of practice around us. That is the experience that people are paying for. If it is an experience that is only learning narrow disciplines one at a time, I don’t think that is going to justify it. You will see a smaller and smaller number of schools providing the traditional MBA.”
The most surprising part of the discussion centered on the shift in how their MBAs are hired and by what kinds of companies. “To find a way to help our students find that perfect fit between one student and a company is going to be a new thing that all of us will have to figure out how to respond to,” added Nohria. “We are all evoving toward a world where there are many more employers, and we can’t rely on the big institutions for recruiting.”
At Harvard Business School, the percentage of graduating MBAs who joined startups that are no more than three years old reached 9% last year, triple the percentage of just four years ago. Those startups paid HBS graduates median starting base salaries of $120,000. At Stanford, meantime, only 15% of last year’s graduating class landed their jobs through on-campus recruiting. Some 37% found their jobs through personal networking or a student search that led to a summer internship and a full-time position.
Nohria’s counterparts agreed that they are seeing more graduates want to work for smaller, early stage companies. Wharton Dean Geoffrey Garrett even suggesting that MBA graduates might be better off at early stage and smaller companies rather than many of his school’s most important employers.
COMPANIES GOING FROM 50 TO 500 EMPLOYEES MIGHT BE A ‘MORE INTERESTING PLACE FOR OUR STUDENTS’
“I have been looking up close at the first jobs for our graduates,” Garrett said. If it is Goldman or McKinsey by God, they have a sophisticated HR function and they know how to come to our schools and Hoover up lots of talent. But it’s the company that is going to go from 50 to 500 employees that might actually be a much more interesting place for our students to work and where they could probably add more value. They just can’t find that company. So we can do some affirmaative action I think for smaller company recruitment where our students might add more value and have more enjoyable experiences.”
Garth Saloner, dean of Stanford University’s Graduate School of Business, confirmed “it’s been a big change for us, too. Of 800 students-counting first years and second years who take jobs—they go to something like 400 distinct companies. The days when a small number of major employers would show up and drive off with bus loads of graduates, that is just not happening anymore.”
From left to right, Wharton’s Geoffrey Garrett, Harvard’s Nitin Nohria, Stanford’s Garth Saloner & Columbia’s Glenn Hubbard
BIGGEST REVOLUTION: ‘MOVING FROM THE CHALKBOARD TO THE WHITEBOARD’
Asked what their business schools wil look like in five to ten years, the deans gave a variety of answers. ”Our graduates will insist upon and we will deliver a more integrated experience so (it will be) less about individiual disciplines and much more about solving problems,” believes Glenn Hubbard, dean of Columbia Business School. “I expect our graduates will be doing different things with more of them in the younger company world. Many more graduates will prepare for different careers over their lifetimes, hopefully including the social sector or public service at some point.”
Wharton’s Garrett had a slightly different view. “The difference between our institutions and business educaiton writ large will probably grow over the next decade,” he said. “Why? Because the convenience moves for a lot of people in the world will become more important. There will be less residential. There will be more online, probably non-MBA degrees will continue to grow…I think the biggest change to the world of business education will be non-degree business education because of the amount of continual up-skilling that people require in the contemporary world and the world going forward. So a question for all of us is how much do we want to play there. The just-in-timeness of our world with the immediacy that the internet provides gives us a real opportunity to be big players there.”
Saloner conceded that change in higher education has come slowly. “if you look at higher educaiton writ large, the way we have delivered education hasn’t changed very much in the past 100 years,” he said. “We still have an individual standing in front of a class of 50 to 75 students. Information goes from the front of the class to the back. The biggest revolution we had in higher education is when we moved from the chaLkboard to the whiteboard and that is something that some of our colleageus still have not adjusted to—and then really being radical, we moved all the way to Powerpoint. But very much the way we deliver education has reamined the same.
WILL EMPHASIZE EXPERIENTIAL EDUCATION IN THE FUTURE
“I think this is starting to change and will change very rapidly. Technology is going to be the driver. Schools like ours are going to emphasize experiential education because much of the content that I just described is going to be available in many other formats using technology online or will be delivered at a distance synchronically and that is not going to be the strong suit of any of our schools or any leading business school. We will continue to attract the highest potential individuals who will come for a transformative experience that will mainly be delivered through experiential learning and to take what we have leanred through reaseach and teaching and to dessminate that and broadcast that very widely using tehcnology so our influence will grow far beyond the bounds of our home institution.”
Nohria focused his remarks on what shouldn’t change. “We are lving through a period of extraordinary change in business education: globalization, technology, the fact that for 100 years we had MBAs largely offerred in the standard format of two years and now, as we have all seen, it is going to proliferate in various ways. But continuity about some core things that we value is as important as embracing change. For us at Harvard Business School, a commitment to leadership, a commitment to general managemnt, a commitment to a transformational educational experience that people can get in residency in two years, that is something that I feel we should be as determined to protect, preserve and enrich at the same time as we think about embracing change. This is a world in which we have to simultaneously embrace change and remain very steadfast about the things that have make our institutions important for a long time and will be important in the future.”
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