Why Students Go To Business School & How They Make Their Choices by: Sangeet Chowfla on April 24, 2023 | 3,099 Views Former CEO of the Graduate Management Admission Council April 24, 2023 Copy Link Share on Facebook Share on Twitter Email Share on LinkedIn Share on WhatsApp Share on Reddit Sangeet Chowfla, former CEO of the Graduate Management Admissions Council, reflects on the business of business education It is generally accepted in Graduate Management Education (GME) that there are two categories of students – career switchers and career accelerators. There is obvious truth to that as career development is the primary motivation for GME. This was the received wisdom when I joined GMAC back in 2013. Over the years I have come to believe that this is an overly broad characterization and not terribly useful in helping segment the market and target an audience. While career development is a given, research has shown that there are other, more nuanced factors in play when trying to understand student motivations and school selection. Much of this more nuanced understanding was developed through some groundbreaking research that was conducted by GMAC as well as interactions with students across the globe. You can view the primary research here. For many students, earning a graduate degree in business is about Respect (and Status) Career advancement, both acceleration and switching, certainly has a role to play but falls short of telling the full story. For many, the primary driver is simply about standing out, gaining status and conversely its modern equivalent FOMO. This is a strong driver around the world but particularly so in the U.S. This drive for Respect/Status and the message of career advancement is obviously correlated and these students relate to stories about the success of alumni, the network that they will gain through their educational experience, and rankings (unfortunately). Respect and Status are intrinsically tied to exclusivity and sets up a quandary – the more open we are, the less exclusive we are. We are a luxury good and face the same problem. If there was a Gucci store in every mall it would not be Gucci anymore and business history is full of examples of luxury brands that pursued volume and achieved neither – Pierre Cardin anyone? WHY GRADUATE MANAGEMENT EDUCATION IS A LUXURY GOOD Some would challenge the luxury good assumption. Education is a public good with a mission to be as broadly available as possible. The high and ever-increasing tuition rates contradict such a statement. A public good should be widely accessible. GME, with its high costs and selective admissions, is anything but. If respect and status is our thing, then class sizes must be small, experiences curated, and we must be good at telling the story. The story is about the success of our alumni and the exclusivity of the club. It’s also about how hard (not how easy as seems to be the current fashion) to get into the institution. Above all, brand proliferation must be managed. It is not a coincidence that some of the biggest brands in GME have limited programs and cohort sizes. Arguably, we are seeing the negative effects of lost exclusivity and brand proliferation in the U.S. MBA market. Schools have added capacity dramatically in the last two decades – partially to meet international demand that is now decreasing, the subject of my last column. Now all that capacity is chasing the same domestic market with more open admission standards. Instead of increasing demand, it is reducing it. For others, it is convenience. LARGEST UNMET NEED IN EUROPE FOR BUSINESS SCHOOL: WORKING WOMEN This is the part-time working professional market. There have always been two motivations here. One, working professionals who are determined that they need a business degree to advance further (often because they have been passed up for a promotion) but cannot give up the job or relocate to study full time. They have been the traditional market for part-time programs. They are saying that they need the degree to take them further but need convenience and flexibility as well. There are lots of working professional programs catering to this need in the U.S. and Asia, but the data suggests that the largest unmet need is in Europe (primarily amongst working women). We also know that Europe has a relatively low domestic participation rate in graduate management education, and female participation is amongst the lowest in the world. Is there a correlation here? Europe has relatively fewer part-time programs as much of the university structure is built around pre-experienced programs, the integrated five-year bachelor and master’s programs and the like. An opportunity presents itself. The second category is the reverse. While the first was students who are saying, “Help me, I need to advance in my career,” the second category is saying, “Help me, I advanced in my career but have trouble keeping up.” We see this in China where decades of growth have pushed executives up the ladder without enough time to learn the ropes. They are looking at GME as a crash course in business and management. Four of 10 Chinese GME aspirants are motivated by this need which explains why China is such a large executive MBA market. India may well be next, and while executive programs are small now, business schools there would do well to prepare for this trend. These segments, driven by convenience, are also the most likely to be disrupted by online programming. Nights and weekends were limited to proximity – the infamous hundred-mile radius – will online have the same limitation? ‘I can’t go to the big brand metropolitan school every Friday but once a quarter may be okay?’ GRADUATE BUSINESS EDUCATION IS A GATEWAY TO THE WORLD For many others, it is the world. We called them global strivers: Students who view graduate management education as a gateway to the world. Immigration certainly plays a role here but so does global curiosity. There is an overlap in motivations with the Respect/Status segments and no overlap with the convenience segments. The brand of the school plays an important part as does the location. This is largely an international cohort and so is very sensitive to work permit and visa issues. They only have two questions for the school – What does your international job placement look like? And what are the post-study work visa policies of the school’s country of domicile? Don’t speak to them about your exceptional research and faculty, speak about alumni success and job placement. Their destinations have been changing. While they were once largely focused on the U.S. and the U.K., Europe is increasingly part of their consideration set and so will places like Korea and Japan as they liberalize their work visa regimes. Six out of 10 Indian students who study abroad type as global strivers. Interestingly, only one out of 10 Chinese students applying abroad do. The latter see their future success in the home country while the former has many role models amongst the Indian diasporas. We don’t have the data but it is worth considering if Chinese students were like Indian ones a couple of decades ago – looking for international careers as opportunities were limited at home – and their desire to go back home is a function of economic development and the jobs on offer in the mother country, and whether Indian students will become like Chinese students a few decades hence as the country continues along its development path. This will require a shift in positioning and schools may well start to consider tie-ups and career service programs back in the home countries rather than only in the West. ‘IT’S NOT ABOUT WHAT BUSINESS SCHOOL TEACHES YOU BUT WHERE IT TAKES YOU’ Skills are a factor for most, but a primary driver for a few. This is an unfortunate reality for educational institutions but the development of skills is largely seen as a means, not the end. Most view them as necessary for another motivation, whether it be status, the next promotion, economic growth, or immigration. As a result, messaging that is primarily about skills, research, and faculty is unlikely to resonate beyond a smaller segment (about one in 10 globally) who are seeking mastery in their field. Put another way, it’s not about what business school teaches you but where it takes you. Unfortunately, that’s not what jumps out when you look at most of our websites. We tend to speak about ourselves – our institution and our expertise – rather than where we can take you. WE NEED TO CHOOSE WHO WE SPEAK TO So, what does this mean to a school? The first takeaway is that it is difficult, if not impossible to appeal to all segments. It’s hard to have a small and exclusive club while simultaneously offering open enrollment online programming, espcecially from the same branded school. In the end, a residential MBA carries the same brand as an online MBA. Location is a major driver for those seeking international careers and is often out of a school’s control (as are work visa policies). Some will be naturally attractive and others will not. We must think hard about what convenience means to working professionals in an online world. Above all, we must understand who we are trying to target, and what their motivations are and build customer (student) valued solutions. My argument here is that we need to stop thinking of prospective students as one amorphous group but as finely differentiated groupings with their own unique needs. And then we need to choose who we will speak to. The word “choose” implies that we will make a decision, not just who we will serve, but also who we will not. This is a hard discipline to master in difficult market conditions. Yet it may be the essence of future success. Author and former GMAC CEO Sangeet Chowfla Sangeet Chowfla led the Graduate Management Admissions Council as president and CEO for nearly ten years from 2014 to 2022. A globally recognized and respected executive with deep experience in the technology, telecommunications, and venture capital sectors, he began his career in New Delhi with IBM/IDM. Chowfla went on to spend 18 years with Hewlett-Packard Co. in Europe, the Middle East, Asia Pacific, and the United States. He culminated his tenure with the company as vice president and general manager of the Inkjet Media Division from 1995-2001. He then moved to Timeline Ventures as a partner in the venture capital partnership. In 2007, Chowfla became the chief strategy officer and executive vice president of the Mobile Services and Global Market Units of Comviva Technologies, a leading Indian telecommunications software company. Chowfla joined GMAC during a period of disruption in the organization and industry. During the last three years of his tenure, he helped to stabilize the candidate pipeline, renewed GMAT exam growth, diversified GMAC’s footprint and ensured a strong financial foundation to enable future investment. Earlier Ruminations Columns by Sangeet Chowfla The Changing Face Of International Student Mobility Why Diversity Is Essential To The Health Of The U.S. Domestic Student Pipeline A Decade Of Graduate Management Education: ‘I Love You, You’re Perfect, Now Change’ Business Casual Podcast: Interview with Sangeet Chowfla Comments or questions about this article? Email us.