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June 2013

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  • Find out more about Disrupt or Be Disrupted: Evidence Based Strategies for Improving Graduate Management Education.

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The Change Imperative: Disrupt or Be Disrupted Preview

Brooks Holtom, McDonough School of BusinessBy Brooks C. Holtom, PhD, Associate Professor of Management, Robert Emmett McDonough School of Business, Georgetown University

In today’s world, relentless change is the norm as businesses strive to stay in front of new competitors, economic fluctuations, globalization, and technological developments. Because graduate business schools face these same pressures, it is no longer enough to maintain the status quo, or even to make incremental improvements. Responding to today’s challenges while balancing relevance, value, and reputation requires unprecedented amounts of strategic thinking, creativity, stakeholder engagement, and interpersonal effectiveness. Interestingly, many of the potential solutions to the most pressing challenges (e.g., financial, shifts in student origin and age, and technology) are interrelated. Thus, a coordinated, strategic approach from business school leaders is critical.

Financial ChallengesDisrupt or Be Disrupted

Concerns about the cost of management education are escalating. American universities have raised their tuition five times as fast as inflation since the mid-1980s. Since 2010, students in Canada, Chile, Germany, and the United Kingdom have organized protests in response to government proposals to increase fees and tuition. On the other side of the financial equation is a precipitous decline in government funding. Under such conditions, business schools must carefully consider where to invest scarce resources. First-rate scholars, for example, are an increasingly expensive component of budgets. So, should these scholars migrate to the few schools that can afford them? Should students access the insights of these scholars via Massive Open Online Courses? Should some schools declare themselves to be primarily teaching or research institutions and not pretend to be both?

Shifts in Student Origin

There are many signs of just how much the market for graduate management education has changed around the world. For example, the early part of the 21st century has seen increased demand for GMAT tests in Asia. In 2012, 30 percent of exams were taken by Asians, an increase of 59 percent since 2004. At the same time, fewer candidates are applying to US schools. Further, the greatest growth in GMAT test takers is in the under 25 age group (47 percent of test takers in 2012). While the market for the full-time MBA shows signs of decline, specialized master’s programs are growing dramatically (e.g., 100 percent increase in applications to non-MBA master’s programs from 2008 to 2012). Another sign of change appears in the market for executive education. Revenues at representative top-tier schools have increased impressively since the start of the 21st century and, consequently, become increasingly important to many schools’ bottom lines.

Technological Opportunities — and Threats

The effects of new technology on collaboration, teaching, and learning are profound. For example, traditional competitors are now teaming up in a university consortium to offer small online courses. Duke, the University of North Carolina at Chapel Hill, Northwestern and others will join together in fall 2013 to offer thirty online courses. The courses are available to their students and to others who must apply, be accepted, and pay more than U.S.$4,000 a course. This will allow students to get access to the best courses or faculty talent regardless of location.

Another innovative use of technology is Massive Open Online Courses. The courses are offered for free by leading institutions (such as Harvard, MIT, and Stanford) and have enjoyed overwhelming enrollment success. Clearly, these and other technological developments will have profound effects on the role of faculty and the need for full-time faculty and brick-and-mortar facilities. While we do not know what is next, we can be certain that technology will continue to evolve in ways that let people to share information more effectively than before. We can also be sure that there will be dramatic gains—such as when the poor get access to previously unavailable world-class instruction—and significant challenges—such as figuring out how to protect intellectual property and maintain incentives to create it. Business school leaders must confront the possibilities as they emerge and examine how technological advancements fit holistically within their schools’ missions, portfolios, and plans.

Summary

Although the market will determine the fate of the varied educational experiments, one thing is almost guaranteed: New competitors and products starkly demonstrate that standing still is unlikely to be a sustainable strategy. Schools must proactively demonstrate relevance, value, and reputation, which means rethinking how they conduct research, select and train faculty, design curriculum, engage students, and measure quality.

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