The Future Of The MBA: An Unbundled, Blended Degree

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In a quarter of a century, most business students will never enter a classroom. The faculty lectures, the MBA student discussions and the homework assignments will occur instead over the Internet, where each part of the educational experience can be played as many times as it takes to fully absorb or satisfy, as if it were a Seinfeld rerun.

The world’s most famous professors will more likely be compelling teachers—rather than journal-published researchers—and many of them will be free agents, unattached to a single university. Technology will allow for free-agent faculty, able to teach directly to students, with the university being what it will increasingly be viewed as: just another middleman taking a profit. Professors won’t need an affiliation with a university, because technology will allow them to create their own brands.

The costs of academic learning will plummet. And much of education will be modular in nature. Students will pick and choose from the best professors and the best colleges and universities worldwide to construct a degree of choice. Some of the experience will still be on-campus, but much of it will be delivered online. There will be little need to go to one school for several years and sit in classrooms with other students. The greatest asset universities now hold—the ability to grant a degree—will have so greatly diminished in value that it will become little more than a quant notion for the learned.

A DOOMSDAY SCENARIO?

A doomsday scenario for business education? Not really. The nominal purpose of a business school is for academic learning. But as learning becomes increasingly available online, it’s likely that the other functions of a traditional on-campus experience—student selection, extracurricular leadership and social development, career management and alumni networking—also will become unbundled. Most business schools inevitably would lose their allure.

We’re already witnessing the very beginning of what will be revolutionary change to the most popular credential in all of business: the MBA degree. As far back as 1975, the MBA blew past both law and medical degrees in the U.S. But it was only three years ago, in 2010–2011, that business edged out education as the most popular advanced degree, accounting for 25.6 percent of all master’s degrees. The numbers for business are largely made up of MBAs but also include specialized business master’s programs, including master’s of finance or accounting.

Yet trouble is brewing. Enrollment in part-time MBA programs—the largest single part of the MBA market—has significantly declined in recent years. The number of people taking the GMAT and expressing an interest in full-time two-year programs also has dropped.

Richard Lyons, dean of the University of California, Berkeley’s Haas School of Business, has boldly predicted that half of the business schools in the U.S. could be out of business in as little as five years or as many as 10. His dire forecast came on the heels of yet another Draconian prediction: Harvard Business School innovation guru Clay Christensen said that half of U.S. universities could go bankrupt in 15 years due to the impact of online learning on their business models.

WIDESPREAD DISRUPTION IS LIKELY AMONG SECOND- AND THIRD-TIER PLAYERS

If a collapse is imminent, it’s not because demand for those with business degrees will diminish. As Paul Danos, dean of Dartmouth College’s Tuck School of Business, puts it, “Businesses have grown enormously in complexity and scope, and more than ever they need ethical, skilled, well-educated, creative leaders who are global in outlook.”

But the ability to more effectively deliver that knowledge over the Internet will cause widespread disruption to the business of education. First off, the cost of education will dramatically fall because technology allows those costs to be distributed over vast numbers of students. A full-time two-year MBA program costs about $120,000. One recent study found that it costs a business school about $1,500 in instructional costs to provide a single course to one student. Online courses, however, dramatically lower those costs to just a few dollars per student.

The fixed costs of a research-based business school are extraordinarily high, making some of these schools look as if they are sitting ducks for massive disruption. Consider this fact alone: It costs a business school $400,000 for its faculty to publish a single article in an ‘A’ level academic journal. That estimate, by two professors, is believed by some to be too conservative.

Roger Martin, the former dean of the University of Toronto’s Rotman School of Management, believes the estimate is closer to half a million dollars. Much of the research, moreover, is going on to fund such esoteric issues that it has little to no application in the real world. Martin, for instance, believes that the cost of an article that could be used in some way by businesspeople is about $1.7 million.

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