BusinessWeek: Half of U.S. Business Schools Might Be Gone by 2020

[Tugg Speedman]

Half of U.S. Business Schools Might Be Gone by 2020

http://www.businessweek.com/articles/2014-03-14/online-programs-could-erase-half-of-u-dot-s-dot-business-schools-by-2020?campaign_id=DN031414

Richard Lyons, the dean of University of California, Berkeley’s Haas School of Business, has a dire forecast for business education: “Half of the business schools in this country could be out of business in 10 years—or five,” he says.

The threat, says Lyons, is that more top MBA programs will start to offer degrees online. That will imperil the industry’s business model. For most business schools, students pursuing part-time and executive MBAs generate crucial revenue. Those programs, geared toward working professionals, will soon have to compete with elite online alternatives for the same population.

Lower-ranked business schools, rather than recognized names such as Harvard Business School and Wharton, are most vulnerable to this phenomenon. When the big players start offering online degrees, they’ll draw far-flung students who might otherwise have opted for the convenience of a part-time program close to home.

Part-time and EMBA programs are a financial engine because they award less financial aid than full-time programs. Since most of their students are corporate strivers already living near campus—and because competition for those students is limited by geography—part-time programs can count on a steady stream of high-quality attendees.

Say you’re a consultant with young kids in Phoenix who wants to boost her career with a business degree. You’d probably choose a part-time MBA program at the University of Arizona or Arizona State University because committing to a long stint away from home is impossible. Education technology “has the potential to make the proximity factor go away,” says Lyons, taking some high-margin students with it.

While most schools don’t publish the total amount of financial aid they award MBAs, Lyons estimates that the average full-time student at an elite school gets a 25 percent discount on tuition. At part-time and EMBA programs, the average student pays something much closer to the sticker price.
Story: Having a Baby While You're in Business School: A Road Map

If brand-name schools lure the best students, part-time programs with lesser reputations may have to become less selective, says Lyons. Without a high quality student body, they have less of an argument for staying in business. They’ll have to ask themselves: “How down-market would you go?”

While few top-tier schools have put MBA programs online, a slew of other business schools have. The elites are slowly warming to the digital world, dabbling in non-degree online education. Online education has mostly shed the stigma of association with such down market institutions as DeVry University and University of Phoenix; as its legitimacy grows, Wharton, Stanford, and their ilk are likely to offer online degrees.

Big names have strong brand recognition that attracts top students (and helps justify their price tags). A school like the University of Arizona’s Eller College of Management can compete on price against higher-ranked programs, but that might not be enough to hold on to that Phoenix-based executive—at least, if she’s good enough to get into an online program from Wharton or Stanford.

Online MBA programs aren’t siphoning choice students from campuses yet, says Ash Soni, executive associate dean at Indiana University’s Kelley School of Business. Kelley ranks 15th on Bloomberg Businessweek’s list of full-time programs and was an early player in online MBAs. The school draws students from across the country, but it is more likely to compete with online MBA programs offered by the University of North Carolina’s Kenan-Flagler Business School and Arizona State’s Carey School of Business. Says Soni: “If you’re a dean from a regional school and you’re asking, ‘Are these online guys tapping into my space?’ The answer is: maybe in the future, but not yet.”

Michael Desiderio, the executive director of the Executive MBA Council, says change is coming, but his group isn’t panicking. “We’re not saying it’s a threat or this is the end of the EMBA space,” he says. “It’s stimulating a discussion: How do we adapt to continue to serve a population that has changing needs?”

Online education is sure to shift the ways schools compete for students. For-profit MBA programs such as DeVry’s Keller School of Management have been the early losers as more traditional universities go online, says Robert Lytle, a partner in the education practice at consultancy Parthenon Group. That trend could extend to lower-ranked schools as the big-name brands follow.

When Lytle talks to directors at schools who are debating the merits of online learning, he tells them to stop dallying and start building programs. “Once you get out of the top tier of schools, you’re either already online, on your way there, or dead in the water,” he says. It isn’t clear which online models will be most successful, but many schools are feeling pressure to get on board. When Villanova School of Business announced a new online MBA program earlier this year, Dean Patrick Maggitti said there has never been a more uncertain time in higher education. “I think it’s smart strategy to be looking at options in this market.”

[mu03eng]

This holds true only if the big companies see online degrees the same as "in-person" degrees.  That transition will be slow....so I think they are probably right but ultimately it's more like 15-20 years.

[martyconlonontherun]

This holds true only if the big companies see online degrees the same as "in-person" degrees.  That transition will be slow....so I think they are probably right but ultimately it's more like 15-20 years.

Pretty much it. There needs to be a better reputation among online degrees.

Honestly, college is over priced and has way too much fat to it. You are paying for the college experience and the status of the degree, not necessarily the education. There needs to be a huge shift towards getting people to realize job training is more important than some random degree that won't help you with your career.

EDx.org has a great site with different classes from the best schools in the world. If you could get set up a learning environment like that to get work around your schedule and then just pay for testing and study help, they may have something.

[keefe]

There are too many MBA schools now. Let's be honest - when I review CV's I give a hard look at the guy with the Wharton or Kellogg degree. Not so much the UWM or University of Phoenix credential.

As for on-line programs, there is a marked difference between full-time in-residence and part-time on-line. If a program is case study-based you must have the dynamics of group discussion to glean the best possible insight. And the better quality of individuals in your group means the better quality of insight you get. And that is the essence of an MBA program - developing the means by which to frame business situations in order to make the best possible decisions.

Distance Learning is fine for many situations. But advanced degrees in business is not one of them.

[Les Nessman]

Superbar

[avid1010]

i think businesses doing their own training/development is a bigger threat as they realize how cost effective the online education route customized to their business can be.  talent is talent, but there's something to be said for proven talent from within that has been developed in a system specific to a business.  

the major business schools are more concerned with quality...if they don't feel they can put out quality graduates online, they won't do it.  if they feel they can draw from a better applicant pool by going online, they likely will.  

[keefe]

i think businesses doing their own training/development is a bigger threat as they realize how cost effective the online education route customized to their business can be.  talent is talent, but there's something to be said for proven talent from within that has been developed in a system specific to a business.  

the major business schools are more concerned with quality...if they don't feel they can put out quality graduates online, they won't do it.  if they feel they can draw from a better applicant pool by going online, they likely will.  

The problem with the in-house model is that it shifts risk from the student/employee to the enterprise. Businesses will always have in-house training programs that are generally skill-specific but will never embrace comprehensive studies programs for reasons of expertise, capital and expense. Neither a business nor on-line Distance Learning can replicate the quality of a top business or engineering program. Stick to your core competency and rely on the experts to deliver the goods.

[forgetful]

There are too many MBA schools now. Let's be honest - when I review CV's I give a hard look at the guy with the Wharton or Kellogg degree. Not so much the UWM or University of Phoenix credential.

As for on-line programs, there is a marked difference between full-time in-residence and part-time on-line. If a program is case study-based you must have the dynamics of group discussion to glean the best possible insight. And the better quality of individuals in your group means the better quality of insight you get. And that is the essence of an MBA program - developing the means by which to frame business situations in order to make the best possible decisions.

Distance Learning is fine for many situations. But advanced degrees in business is not one of them.

Look at top consulting firms like McKinsey.  How many schools (for MBAs) do they actually consider applicants from…it is very few.

[ChicosBailBonds]

Look at top consulting firms like McKinsey.  How many schools (for MBAs) do they actually consider applicants from…it is very few.

Unfortunately.


I work with McKinsey...very smart people for some things, while in other things they just don't get it.

[mu03eng]

The problem with the in-house model is that it shifts risk from the student/employee to the enterprise. Businesses will always have in-house training programs that are generally skill-specific but will never embrace comprehensive studies programs for reasons of expertise, capital and expense. Neither a business nor on-line Distance Learning can replicate the quality of a top business or engineering program. Stick to your core competency and rely on the experts to deliver the goods.

Agreed, plus one of the key takeaways from an outside learning environment is the engagement with outside professionals with different experiences and knowledge.  It's the cultivation of "outside" ideas that really bring the benefit to a corporate entity.

[keefe]

Agreed, plus one of the key takeaways from an outside learning environment is the engagement with outside professionals with different experiences and knowledge.  It's the cultivation of "outside" ideas that really bring the benefit to a corporate entity.

Unless you work at GM...

[Coleman]

Heisenberg, Superbar, cmon

[ZiggysFryBoy]

Unfortunately.


I work with McKinsey...very smart people for some things, while in other things they just don't get it.

Not a fan of McKinsey or consultants in general.

[jsglow]

Weeding out the B schools would be a good thing in my opinion.  Seems like everyone has an MBA these days.  In my view, only those from a top 20 program really mean much. 

And not to dump on my beloved MU, but I didn't even consider staying when I pursued my own graduate education 30 years ago.  Glad I was old (mature) enough at the time to truly appreciate the opportunity I was given.

[keefe]

Weeding out the B schools would be a good thing in my opinion.  Seems like everyone has an MBA these days.  In my view, only those from a top 20 program really mean much. 

And not to dump on my beloved MU, but I didn't even consider staying when I pursued my own graduate education 30 years ago.  Glad I was old (mature) enough at the time to truly appreciate the opportunity I was given.

Intellectual incest can result in horribly malformed offspring...it is always best to mix up the genetic stew

And I agree there are too many graduate schools of business. Beginning in the '80's everybody felt that they must have an MBA in order to be competitive in the workplace. But the reality is that not all MBAs are created equal. And the purpose of matriculating should never have been to check a box but, rather, to acquire the analytical skills that make one a better, more discerning decision-maker.

There is a significant difference between curricula in graduate education. A Masters in Engineering from Michigan trains one to apply knowledge as a subject matter expert in a specific area. A Masters in Business from Harvard trains one to engage knowledge broadly as an agile generalist.

     

[JWags85]

Intellectual incest can result in horribly malformed offspring...it is always best to mix up the genetic stew

And I agree there are too many graduate schools of business. Beginning in the '80's everybody felt that they must have an MBA in order to be competitive in the workplace. But the reality is that not all MBAs are created equal. And the purpose of matriculating should never have been to check a box but, rather, to acquire the analytical skills that make one a better, more discerning decision-maker.

I don't necessarily agree with jsglow's comment about the top 20 as I know a couple of people who got MBAs outside the top 20 that served them extremely well, and from a fellow MBA's perspective, their curriculum seemed valuable and varied.

Myself on the other hand, I received and MBA from what was a top 10 part-time program, and though it provided me with opportunities, I actually was quite disappointed in my experience and agree with what I am hearing some say here.  A good chunk of my "core" classes were glorified undergrad business classes that provided little value to anyone who had taken an undergrad business course.  But more troubling, my classes were largely made up of foreign (mostly Chinese) students with no business experience, just graduated from undergrad who were attending "full-time" and had little to offer from similar business experiences, or other students who I didn't anticipate matriculating with.  The program still has respect and name recognition, but I can't see it retaining the rankings that drew me in, and I am jealous of hearing some of the stuff that my friends have gotten to experience within other programs.

I did learn alot about time management, goal setting, and motivation, which was valuable to be sure.  Unfortunately, it the current business/academic climate, full-time MBAs are not a very feasible solution for many, but such programs seem to be ideal for truly developing the classic "MBA skill set".

[tower912]

 A Masters in Engineering from Michigan trains one to apply knowledge as a subject matter expert in a specific area.

     

The guy who drives my fire truck has one of those degrees.   He applies his knowledge to conspiracy theories.   

[keefe]

The guy who drives my fire truck has one of those degrees.   He applies his knowledge to conspiracy theories.   

Kaczynski?

[brandx]

Kaczynski?

Wonder what was worse. The de-humanizing experiments at Harvard or going to Michigan?

[tower912]

Kaczynski?

Nah.   Worse people skills than Ted.   (I kid)

[keefe]

Wonder what was worse. The de-humanizing experiments at Harvard or going to Michigan?

You have to wonder about someone so brilliant they can conceptualize quantum mechanics in their mind. I think Kaczynski's psyche was damaged by his upbringing but being exposed to Murray's MKUltra experiments destroyed his already fragile balance. I am dismayed that our official revulsion at reports of Manchurian Candidate activity by NK & the PRC led our government to sponsor such research on American citizens, including Harvard students. The fact that the CIA covered up these abuses is all the more criminal. 

[Benny B]

There are too many MBA schools now. Let's be honest - when I review CV's I give a hard look at the guy with the Wharton or Kellogg degree. Not so much the UWM or University of Phoenix credential.

So I take it you're not on Microsoft's board of directors.

[keefe]

So I take it you're not on Microsoft's board of directors.

Nope. And if you think Nadella's UWM credential was decisive in his ascension then you are naïve. Nadella ran the Cloud Team, which was one of MS's few wins over the past 7 years. Nadella was selected because he is a hard core techie, unlike Balmer who has a sales profile. Nadella's lack of consumer experience is an issue but Gates' self-designation as Nadella's mentor as "Personal Technical Advisor to the CEO" clearly signals the founder's commitment to ensuring Nadella's success.

Microsoft has fumbled on the two most important developments in mobile computing - smart phones and tablets - and Nadella's perspective as an engineer will be counted on to address MS's market erosion to Google and Apple.

I am not on the MS BoD but my wife was a 20 year veteran who reported directly to Jeff Raikes. Jeff took her, among others, with him to the Bill & Melinda Gates Foundation in '08. She knew Nadella and spoke highly of him. I have actually met Nadella and his wife Anu socially and we spoke of Milwaukee. And I will tell you his undergrad work in Hyderabad and his MBA from Chicago figure far more prominently in his personal scheme of relevance.

[harop23]

Inventions of tablet and smart phones affect the school education. There is need of development in syllabus and include new technology in study and training of students.  

[chcsportsfan]

I have some bad news for many of you.  1. It does not matter what school you went to 5 years after you leave.  It is all about what have you done lately.  2.  There are online programs out there from public universities that have 0 indication that they are online. 
Prepare for a few select graduate programs to be online, but many undergraduate degrees as well (again at major universities).  It is where we are headed.  Other than leaving your job for 2 years, in today's work environment where travel and relocation are expected, online is almost required.

[GGGG]

This holds true only if the big companies see online degrees the same as "in-person" degrees.  That transition will be slow....so I think they are probably right but ultimately it's more like 15-20 years.

Actually a lot of very reputable MBA programs already have hybrid options where you can take classes online OR in person.  The difference isn't noted on a transcript. 

And I think we are well beyond the point where there is skepticism of online programs if they are taught by reputable schools.  In fact there are some real advantages to taking a mix of classes online and in person.  It does model the modern workplace and how you interact with people.

Where you are first going to see the drop off are schools like Mount Mary and Lakeland - where the consumer is eventually going to see that those degrees don't give much of a benefit.