Pick up any business newspaper or magazine and you will come across articles with headlines such as ‘Is the MBA still valuable?’ or ‘The future of MBA education’. The world over, there is an increasing focus on value derived from an MBA degree. Added to this are the uncertainties created by the volatility in global economy and by trade and immigration policies. Little wonder then, that international MBA programmes, particularly in the US, are reporting a significant slowdown in applications. There has been a shift towards specialised or short-duration programmes, driven by perceptions on the money value of time.
Traditionally, the word value has been equated to low-cost. Often, we tend to use the word as part of the phrase value for money, implying getting something acceptable for a low price. However, value is defined as a set of benefits for a commensurate price. You get value as long as the benefits you derive are consistent with or exceed the price charged.
Looked this way, business schools providing higher benefits, however, defined by stakeholders, and charging a high price for those benefits, offer the same value as those that provide a lower set of benefits but also charge a lower price. This constant slope line mapping the relationship between price and benefits is called the value equivalence line. The problem that plagues business schools both in India and abroad is that there is significant over-crowding on this line, as more and more schools join it. This leads to a loss of differentiation and concomitant erosion in value. Simply put, the reason we perceive that the general MBA is losing value is that business schools, for all their preaching about innovation and cutting-edge pedagogy and research, are actually doing very little of it.
While placement outcomes are undoubtedly an important metric for defining the reputation of a school, they place an undue emphasis on short-term returns. This leaves ‘general MBA’ business schools at a value disadvantage relative to those that offer short-term or online programmes. This challenge is going to be felt even more acutely as MOOCs such as Coursera and EdX fine-tune their course offerings towards individual geographical regions or markets.
It is therefore clear that value needs to be defined. Rather than focus on the denominator, namely price, or on short-term metrics, business schools need to enrich the numerator. The question schools need to answer is not ‘What is your placement record?’ but rather ‘how well have you prepared me and continue to prepare me for my entire career?’ This may necessitate new ways of looking at both prospective and current students such as mapping out their career path rather than their placement prospects at a job, periodic up-skilling opportunities for alumni, global alliances for facilitating cross-fertilisation, and several other possibilities.
A second source of value that can be created in the general MBA is a greater emphasis on customisation. Business education around the world is in the mature stage of the product life cycle. Along with maturity comes hyper-competition, as schools jostle for the attention of the best and brightest, offering scholarships as a means of attraction. While such moves do generate temporary gains, they are unlikely to create a sustainable advantage. This is why business schools need to move towards customisation. Students do not learn at the same rate, and the large classroom format is not conducive to producing consistent learning outcomes for all students. The availability of online learning formats can be a powerful option for providing customised content to individual students.
A third source of value is the network. The benefit of being an alumnus of a good business school can be hardly overstated. The power of an alumni network opens doors when they are otherwise closed. This is one advantage that online learning platforms and specialised programme will not be able to replicate easily. However, alumni engagement is still not very high at most business schools in India, apart from some annual get-togethers. Institutions that invest in alumni engagement and build brand passion are more likely to create long-term value.
Finally, value is created by investment in knowledge creation. Institutions that are at the forefront of research provide more contemporary perspectives on the problems of today rather than regurgitating knowledge created for solving the problems of yesterday. A lot has been said about incorporating practical content into the curriculum. I agree with this view. However, a healthy eco-system should not only have to rely on industry to provide inputs to the classroom; rather, there must be a reverse flow from the classroom to industry, with new knowledge being relayed back to companies for implementation.
In closing, I would suggest that the question ‘Is the ‘general MBA’ losing its value?’ is a misleading one. Certainly, there is erosion in value if looked through the standard lens of price and short-term outcomes. However, I believe there are plenty of ways to redefine value that can help business schools sustain the true worth of the MBA and keep it competitive with substitute options.