Disruptive Innovation Goes to Business School: Is the MBA Dead?

Disruptive Innovation Comes to Business School: Is the MBA Dead?

The dilemma that has arisen a few years ago in the business schools sector is whether they were capable of adapting to changing market conditions. This required in an accelerated manner each year that technological innovation continued to explode, keeping school programs aligned with demand and need. Which is not as simple as it sounds.

The renovation that business schools have made in their curricular components, say, ten years to the present, has been significant. MBA degrees were forced into accelerated renewal in an attempt to ensure that they remain relevant in the 21st century. And this was mainly due to the fact that the procedures and systems that were being required at the managerial level in the organizations were suffering the impact of the NT’s.

And among other factors that arose, there was a greater focus on workplace problems with all the components that must be taken into consideration (if the function in that position is absolutely renewed in accordance with the NT’s), at the same time as which ones were being the changes in corporate culture and the priorities that entrepreneurs now had for the company and worker, as well as sustainability and corporate social responsibility, or the changes in the way in which information is processed and distributed from the restructuring of all administrative and operational processes.

Without a doubt, business schools, even more so with the added factor of Covid-19, have been faced with increasing challenges in order to remain relevant and competitive, given the decrease in enrollment for most MBA programs. Therefore, in this doctrinal contribution, we will try to resolve these questions, seeing how the panorama is, the changes that are being made today and the way in which the very near future is faced. Business schools also have to apply disruptive innovation in order to cope with change.

They should focus on three basic elements:

a) The creation of new ideas, especially in the commercial and marketing field.

b) Prove that they work in the market.

c) Moving up the ladder, which means a reallocation of resources and implementation of actions in order to guide the new business towards growth and sustainability.

After several decades of sustained growth in the MBA market, with a fourfold increase in degrees awarded annually, many voices argue that today, regardless of the pandemic, a critical point has been reached, which not only has to do with the constant renewal of the programs to which we alluded, but with the price variable, since, specifically in the United States, there are several experts who argue that the MBA will be dead if its cost continues to be between 50,000 and $ 100,000, but it won’t be if it’s reasonably priced, with a high return on investment, and flexible models.

Western Governors University (WGU) has pioneered the use of competency-based online education (CBE) (Competency-based online education). What is especially sought is that the programs are affordable and convenient for people who would not otherwise have an educational option. From its inception, WGU has aimed to serve students who would otherwise be left outside the traditional system.

Now, the innovative institution has graduated 110,000 students and has another 110,000 students currently enrolled. These achievements demonstrate WGU’s ability to scale its high-quality, low-cost model, signaling a momentous shift in the higher education landscape.

As president of the AEEN I must ensure that our sector is addressing these concerns in Spain that have been taken into account in leading schools in the No. 1 market in the world of MBAs. This implies attending to all that universe of students who, for different reasons, are neglected. In the case of the United States, it was due to minorities, rural, low-income and first-generation university students, who, based on this new policy, are finding their place for postgraduate studies in which high educational quality is taken care of and that the price variable plays in favor.

It was precisely at the WGU that, when offering this new value proposition, there was no doubt that it was the consequence of an innovative and thoughtful disruption. Many analysts and experts in quaternary teaching had been warning it for several years that this moment was going to come, because social evolution has to manifest itself in all areas, facilitating access to postgraduate courses for people who ten year ago they couldn’t even think about it. And it should be noted, that regardless of the respective trends, the MBA is still solid and relevant, but it needs a reinvention that allows access to potential students.

As always happens in all crises, adjustments do occur (orthodox economists refer to “market accommodations”) and obviously the postgraduate training sector is no exception. We knew that many business schools with the impact of Covid-19 during 2020 and the implications that the pandemic has continued to have for the global economy so far in 2021, were going to close their campuses and individual programs, such as MBA programs. full-time, and would be forced to substantially improve online offerings.

This means that by laws also of survival in the markets (which have existed as a matter of course since the appearance of economics as a science), universities and business schools that will be more agile and adapt faster, grow at the expense of those that fail. But especially there will be some educational institutions, with great disruptive capacity and in advance of events, that will grow significantly. One of these disruptors has been WGU, of which many schools will follow its example.

How is the current MBA market situation?

In order to respond to the demands of the market, which must already take into account the accessibility to which we have referred, the online MBA offer must be flexible but powerful from an academic point of view. In other words, the relevance of the course has to be more related than ever to the cost, in addition to a key factor that although we had been exercising it from Spanish schools for years, now it is an imperative from which they will not be able to deviate, rather it is a key factor: we mean support for students and also professional support.

A fundamental element to be considered by designers of MBA programs is that, although online programs have increased in recent years, their demand has not done so at the same rate. In other words, a stabilization is perceived in the students demanding new courses. Therefore, for the good administration of business schools this factor must be taken into account, to be concerned about the competitiveness of the programs and public access to higher education. Once again, price and quality concur in the priorities of postgraduate educational planning.

Also, another of the permanent discussions that take place in our sector is whether business schools and the professors who are part of them can respond to the market and the needs of students quickly enough, and how much they can change without losing the identity or purpose. There are also questions around long-standing programs, what content they should deliver online, and how much they should embrace experiential learning.

Undoubtedly, the contracting companies will demand changes in the study plan and the participation that they may have in postgraduate training as an experimental laboratory so that new professionals are at a high level of productivity in a short period of time. But in turn, greater business demands will provide greater options for students in terms of the diversity of platform offerings on which they can carry out an MBA, taking into account that there are many third-party companies that can deliver content in virtual formats and that they are part of said MBA, because either they have an agreement with the school or because it is a technology that no student can ignore and that has been implemented in the market, for example recently, and no MBA program at least for now pick up.

Business schools do not always have consistent processes for regular review of the curriculum, and when they conduct reviews, it is often at the last minute. Hence, an open dialogue is important, such as round tables on MBA that have been carried out in the United States, in order to review processes and practices of the curriculum: how to obtain data points from alumni, from students recruiters and their current and future students.

The point is that the curriculum has to be an inclusive approach with input from employers, students, teachers, administrators, and all other stakeholder groups.

What is the future outlook for MBAs?

 When we asked ourselves in the title if the MBA has died, the answer is overwhelmingly that it has not and that it has a life for many years. The appropriate way to focus from educational institutions the steps that MBAs have to take in these next three to five years, is to see what level of professional advancement is required in future scenarios and in return what training priorities should accompany said advances. Therefore, there will continue to be demand in the future for MBAs and companies that hire new professionals will continue to value, as they have done so far, the added value that a postgraduate graduate can bring to the company.

There is little doubt that applications for two-year full-time MBA programs have declined for five years in a row and that more schools are closing their MBA offerings and actual enrollment in many more programs has declined. But we believe that on the contrary to burying the MBA, to the extent that it has been disruptively innovated in our graduate sector, it will continue to be doubly demanded by students and by job applicants. Of course: price and quality are priorities, because this relationship will have to continue to be adjusted for several years to give access to thousands of candidates who were in the greenhouse due to the stabilization that occurred recently in demand.

Antonio Alonso, president of the AEEN (Spanish Business School Association) and general secretary of EUPHE (European Union of Private Higher Education)