How Traditional MBA Programs Can Innovate to Stay Relevant

Business schools teach two invaluable lessons to the next generation of leaders: how to build strong organizations and how to leverage the power of markets. Now, to respond to the changing dynamics within the education market, business schools must practice what they preach and teach.

To be relevant in the future, business schools must become increasingly responsive to the needs and demands of their consumers—the 275,000 students enrolled in some 516 accredited business schools across the U.S. These students, like consumers everywhere, are faced with more choices than ever before: specialized master’s degrees, online programs from reputable institutions, and blended learning experiences that combine virtual and bricks-and-mortar classrooms.

To respond to these changes, business schools, individually and collectively, must participate in the transformation of traditional MBA education. That means exploring greater use of technologies and data analytics that allow for mass personalization of academic programs; studying a growing number of alternative pathways to help people build skills and obtain jobs; and examining opportunities to collaborate among institutions.  

Such changes were top of mind among post-secondary education experts who participated in a panel discussion I moderated at the recent Wharton Business Education Online Learning Summit. These innovators from traditional institutions, digital education, and corporate partners see a future that is not only very different from the recent past, but also one that is ours to design and develop.

The good news is demand for education broadly remains high, and business education continues to dominate the student choice, as seen in 50% growth in those earning MBAs in the last decade. However, the higher education market has shifted faster than the product has evolved. Tuition has been growing by 4.5% per year on average and overall debt is rising by 3.3%, while average post-MBA salaries have only increased by 1.6%. At the same time, power is shifting to students who are seeking more options than “one-size-fits-all” programs, with greater expectations of customization in the learning experience. Greater mobility and connectivity also mean that studying and learning can happen everywhere. Across the board, business schools must consider where, when, and how MBA and other business curricula are delivered.

Change in post-secondary business education is already occurring. For many business school candidates, quitting their jobs to enroll in full-time programs does not make economic sense if their salaries are not likely to rise appreciably upon receiving their MBA degree. Such realities are already impacting full-time programs. For example, Wake Forest University announced in 2014 it would no longer accept applications for its full-time daytime MBA program, but is expanding offerings for evening and weekend programs. At the time of its announcement, Wake Forest ranked in the top 50 full-time MBA programs.

Schools are also experimenting with alternative credentials, from certificate programs (Northwestern offers several, including in business analytics, human resources, finance, and leadership and management, among others), to Harvard University’s HBX online education initiative.

One of the biggest changes, and one that offers a great deal of excitement for enhancing the relevancy of business education, is increased partnerships with corporations and other organizations. Corporate partners not only continue to recruit MBA graduates, but also tap higher education resources to help their employees develop and evolve. As John Palmer, chief learning officer for AT&T, which offers AT&T University for leadership development, told the Wharton panel, “We’re going to have to build the bridge from business schools to business and make sure it’s a lot more cohesive than it is today.” AT&T, for example, has partnerships with such institutions as Georgia Tech, the University of Oklahoma, and Notre Dame. Another example is Arizona State University’s partnership with Starbucks and its College Achievement Plan, which highlights the opportunity to create specialized programs for diverse employee populations.

Susan Cates, chief operating officer for 2U, which partners with universities to develop digital offerings, and another Wharton program panelist, observed: “Everything we do is in partnership. And we really approach it from the standpoint of [being]… fully aligned with our university partners…. As we launch the program together, it has to fit into their strategic vision for the school.”

Myriad themes, ideas, and questions will shape the landscape of business schools going forward. But just as we teach our students, the future belongs to those who have vision and can be part of the change. The institutions that stand the best chance of success will be those that listen to the market, introduce innovative curricula that meets market needs, explore a variety of program delivery options (online, classroom, and blended), and proactively create partnerships with business. And, as we move forward into a future of our own design, business schools have to be willing to engage in discussion and collaborate, to enhance and communicate the power of business education and the importance and value we offer today—and tomorrow.