What is happening with MBAs?
As applications decline globally and acceptance rates increase, it's clear they are not as trendy any longer. Where will top talent find signaling, connections and opportunities in the era of AI?
Hey, we are Ramón Rodrigá?ez and Andrea Marino, Co-Founders at Nova, the Global Top Talent Network.
Welcome to Talent First, our newsletter where those who believe that talent is the most important resource in the economy get together.
Every week we cover a new topic related to attracting, hiring, developing, and retaining talent, as well as the learnings from our journey building Nova.
Summary:
1. The value proposal of MBAs
For decades, the Master of Business Administration (MBA) has been the gateway to professional success. An MBA was very useful because of 4 main drivers:
These 4 drivers have been very true during the end of the XXth century and up until 2010-2015, particularly if you attended top-tier MBA schools such as Harvard, Columbia, Stanford, Wharton, INSEAD, London Business School, IE, Bocconi or IESE.
The financial ROI was also pretty clear: according to a Harvard survey of 2015, MBA graduates earned $75,000 which increased to $145,000 after the program. This financial uplift, combined with the acquisition of knowledge and networks, has long justified the investment in an MBA.
Actually, many of today’s top executives have leveraged their MBA education to ascend to leadership positions. Here are ten notable examples:
2. How the tech revolution changed everything
The data: MBAs are not as trendy anymore
It’s tough to say but it’s the truth. People are not applying to MBAs as much.
And it’s not just happening with people close to us (both in Nova and from our close friends), it’s a global trend. According to a report by BSchools.org, MBA applications dropped by 4.9% during 2023, following a 6.5% decline the previous year.
In 2024, the number of applications to the best American MBAs kept declining vs. 2023, and the acceptance ratio kept increasing:
Stanford: 6.190 (? 48) — 8,4% acceptance rate
Harvard: 8.149 (? 115) — 13,2% acceptance rate
MIT: 5.317 (? 32) — 17,8% acceptance rate
Columbia: 5.643 (? 213) — 22,4% acceptance rate
Berkeley: 2.904 (? 279) — 23% acceptance rate
Chicago Booth: 4.184 (? 168) — 32,6% acceptance rate
Other than Stanford, which got slightly more complex to join (8,4 vs. 8,6% acceptance rate), all of the other prestigious MBA schools had fewer applications and a higher acceptance rate than 1 year before.
This is a big issue for MBAs, as it may be the start of a race to the bottom: if applications decline but class sizes remain the same, the quality of candidates will decline as well, thus making the programs less valuable, which will further reduce applications and create a vicious circle.
The drivers behind this change
Ok, but why is this all happening? Why are MBAs not trendy anymore?
We believe there are at least 3 good reasons for this change:
1. A 1-off big investment does not make sense anymore
The first thing that has changed is how rapidly skills change. In today's fast-paced world, the shelf life of specific skills has shortened dramatically. Technological advancements and evolving industry practices demand continuous learning and adaptability.
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The concept of lifelong learning has become imperative. Unlike the traditional model of a one-time educational investment, professionals now need to engage in ongoing education to stay relevant. This shift challenges the traditional MBA framework, which is often a significant, singular investment in education.
2. The content lever has disappeared
The second big change of the past 10 years is that the tech revolution has fundamentally altered the way we access and consume information. The internet has democratized education, making high-quality content accessible to a global audience. Platforms like YouTube, Coursera, and Khan Academy offer courses that cover much of the MBA curriculum at little to no cost and with much greater flexibility. For years these resources may have lacked the personalized instruction of a classroom setting, with AI personalization will soon be the norm, so the content lever will fully disappear.
3. The opportunity lever has disappeared
Finally, the market's perception of MBAs has shifted. Employers are increasingly valuing practical experience and demonstrable skills over formal credentials. Your skills and what you have done are more relevant than what you know in a world of easily accessible information. As a result, the salary premium traditionally associated with MBA graduates has diminished in certain industries. Data indicates that the financial advantage of holding an MBA is not as pronounced as it once was, prompting prospective students to question the value of the degree.
3. The future of MBAs
Despite these challenges, MBAs remain valuable in 2 main cases:
1. Changing careers
For individuals aiming to make a significant career change, an MBA is still a great resource to have the time, structure, and network to change careers. For instance, if you started your career working as an engineer, an MBA can be great to consider more “business” options such as Management Consulting or Investment Banking and to have the time, support, and “storytelling” to prepare the selection processes.
The immersive nature of an MBA—taking a step back from the workforce to gain new perspectives—remains a compelling value proposition. In an era of relentless work schedules, having a structured environment to reflect on one’s career and aspirations can be incredibly valuable.
2. Sponsored (scholarship or company sponsor)
Additionally, for those who receive scholarships or corporate sponsorships, the financial burden of an MBA is reduced or eliminated, enhancing the ROI and making the decision a bit easier. In such scenarios, the benefits of the program can outweigh the costs, making it a worthwhile pursuit. While admission standards may have relaxed slightly due to declining applications, the peer group at elite institutions continues to be high-caliber.
Yet, it's clear that MBAs are no longer the default best option for the most ambitious professionals. With rising costs, diminishing salary premiums, and the availability of alternative learning resources, candidates must evaluate whether an MBA aligns with their specific career goals and financial situation.
4. The alternatives to an MBA
As traditional MBAs lose some of their appeal, top talent still need alternatives to fill the gaps that MBAs traditionally covered, namely signaling, networking, and opportunities, as content can be easily found elsewhere. Several emerging models and organizations are addressing these needs in different ways.
1. Networks and Vertical Bootcamps
Since networking is one of the biggest selling points of an MBA, several organizations have emerged to fill this gap without requiring a two-year commitment.
These communities provide many of the networking benefits of an MBA at a fraction of the cost, helping professionals build relationships and advance their careers.
2. Employer-sponsored learning and upskilling
Companies are investing more in internal talent development, recognizing that on-the-job training can be more relevant than an MBA. Many organizations now offer:
This shift signals that employers value continuous learning and practical skills over traditional degrees. Many top firms now prioritize experience, problem-solving ability, and leadership potential over MBA credentials. Still, these lack the signaling and networking often looked for in MBAs.
3. Startup and entrepreneurial ecosystems
MBAs were (and still are) full of aspiring entrepreneurs. For those looking to start a business or work in startups, MBAs are not anymore the best investment. Instead, accelerators, incubators, and startup networks offer a more hands-on, relevant experience.
With the rise of no-code tools, AI, and automation, entrepreneurs can learn by doing rather than spending two years in an MBA program.
5. Final thoughts
All in all, we believe the MBA is not dead—but it’s no longer a one-size-fits-all solution for ambitious professionals. Instead of being a must-have credential, it’s becoming a situational tool that is useful in very specific career scenarios (career switching, scholarship, or employer sponsorship mainly).
For many, the future of career development lies outside traditional education, and we believe that networks like Nova will be the place where most top talent will find signaling, networking, and opportunities, without requiring an expensive degree. Time will tell if we are able to have a significant impact in the world like MBAs have had, but we do expect many Novas in C-Level roles of the future biggest companies.
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Medical Affairs Vaccines at MSD | MSc in Medical Affairs, Medical Advisor and MSL | Biotechnologist
1 个月Brilliant breakdown of why traditional MBAs are evolving! The key insight: professional development is no longer about a single degree, but continuous learning and adaptable skills. Loved how the analysis highlights that networks, practical experience, and real-world impact matter more than ever. The future belongs to curious, agile professionals who can quickly adapt and create value.