The Future of MBA Education:

In this era of competition business schools are positioned on increasingly unsteady—and unpopular—ground. MBA enrollments fluctuate or decline; recruiters voice skepticism about the value of newly-minted MBA degrees; and deans, faculty, students, executives, and a concerned public wonder what business schools can or should do to train knowledgeable, principled, and skilled leaders.

Against this backdrop of problems, business schools are poised to take advantage of exciting opportunities to cooperate and innovate, argue HBS professors Srikant M. Datar and David A. Garvin and research associate Patrick G. Cullen in their new book, Rethinking the MBA: Business Education at a Crossroads. Employing a wealth of interviews and quantitative data, their book takes the first comprehensive approach in decades to examine the evolving MBA marketplace and its threats as well as possibilities for improvement and growth.

"Rebalancing must occur." -Srikant Datar

"Increasingly, we believe, business schools are at a crossroads and will have to take a hard look at their value propositions," the authors write in the introduction. "This was true before the economic crisis, but is even truer in its aftermath. The world has changed, and with it the security that used to come almost automatically with an MBA degree. […] High-paying jobs are no longer guaranteed to graduates, and the opportunity costs of two years of training—especially for those who still hold jobs and are not looking to change fields—loom ever larger. To remain relevant, business schools will have to rethink many of their most cherished assumptions."

In an interview, we asked Datar and Garvin to explain more. Datar, the Arthur Lowes Dickinson Professor of Accounting at Harvard University, is the Harvard Business School senior associate dean and director of research. Garvin, the C. Roland Christensen Professor of Business Administration, teaches courses for MBAs and executives on leadership, general management, and operations. Garvin is also faculty chair of the School's Christensen Center for Teaching and Learning, which promotes and supports teaching excellence and innovation.

Martha Lagace: What led you to identify and study gaps and opportunities in MBA education?

David Garvin: To celebrate the 100th anniversary of Harvard Business School in 2008, we convened a number of colloquia and workshops. One was entitled "The Future of MBA Education," and Srikant and I were responsible for preparing and leading it. Our initial goal was simply to gather enough material to conduct a day-long conversation with our faculty drawing on interviews with executives and business school deans.

As we began to conduct initial interviews, however, we kept hearing the same concern: "Thank goodness you folks are doing this. All of us collectively need to take a hard look at the state of business education."

Srikant Datar: With that prompting, we expanded our efforts. We collected comprehensive data on business schools, including the yield rates at various schools; how many applicants they accept of those who apply; of those who accept, how many actually attend; and what is happening to the total enrollments. It was a big surprise to see a hollowing out of the MBA marketplace: in full-time programs, declines in the order of 25-, 30-, even 50-percent at highly-ranked schools outside the top 15 or so schools.

The schools were, by and large, unaware of how widespread the problem was. Each thought the problem of declining enrolments was unique to them. In the course of our research, we learned that prospective applicants were being discouraged by many employers from going to full-time MBA programs, that part-time MBA, executive MBA, and other masters programs were seen as attractive substitutes, and that the students who came were not as engaged with the academic curriculum.

Garvin: The common question we heard was about the value added of an MBA degree. In every interview, deans and executives returned repeatedly to that question, as well as to a large set of unmet needs that they identified in areas such as leadership development, skill at critical, creative, and integrative thinking, and understanding organizational realities.

Q: Were they deeply worried?

Garvin: Among deans, there was widespread acceptance and recognition of the same set of missed opportunities and unmet needs. Some schools, however, had already launched change programs that incorporated flexible curriculums, courses in creative or integrative thinking, or experiential learning and project work. A few schools were cutting-edge in one or more of these areas. Other schools felt that the business school community as a whole had a long way to go. So while there was a uniform degree of acceptance of opportunities and needs, the extent to which they were being met revealed dispar

Q: Why is MBA education at a crossroads?

Garvin: We are approaching the end of an era. Since 1959, business schools have taken a more analytical and discipline-based approach than before. For the last 50 years, then, business schools have emphasized analytics, models, and statistics.

Yet MBA graduates increasingly need to be more effective: they need to have a global mindset, for example, develop leadership skills of self-awareness and self-reflection; and develop an understanding of the roles and responsibilities of business, and the limitations of models and markets.

At these crossroads, how should business education proceed? We wrote the book to outline the needs and to explain how schools are addressing them in surprisingly innovative ways. We include in-depth case studies of six programs: the University of Chicago Booth School of Business, INSEAD, the Center for Creative Leadership, Harvard Business School, Yale School of Management, and Stanford Graduate School of Business. Each is exemplary in some way—largely in their efforts to address one or more of the unmet needs.

Q: How should schools close these gaps? You say your book offers a compass, not a roadmap: it points readers in a direction but doesn't tell them exactly which path to take.

Datar: The right answer for each school depends on that school's strategy, challenges, constraints, and skill sets. Yet rebalancing from the current focus on "knowing" or analytical knowledge to more of what we call "doing" (skills) and "being" (a sense of purpose and identity) must occur. Business schools need to think innovatively about how best to use the resources available to them. For example, there are many exciting opportunities to engage alumni in the learning process.

Garvin: Faculty could be expanded in creative ways. Think of Harvard Medical School. It has incoming classes of 165 students and 10,000 faculty! It's an astonishing number that makes sense only after you realize Harvard has 17 affiliated hospitals and many of the doctors in those hospitals teach tutorials and lead clinical rotations, and in that sense are considered faculty. The same notion of an extended faculty could apply to business schools, where the 10,000 might include alumni such as local business leaders, who with suitable oversight and training by core faculty could help with team projects and experiential learning. Training might come initially through the collective work of multiple business schools, with cohorts of alumni who receive a short dose of either functional knowledge or research skills or teaching training, or some combination of the three. Schools need to experiment to see what works best for them.

Datar: We also believe that it is important for schools to broaden the types of research that faculty conduct at business schools. The discipline-based research of the last 50 years has certainly advanced our understanding of management, and needs to continue. At the same time, as a recent report by the Association to Advance Collegiate Schools of Business points out, we need research that is more practice-oriented and interdisciplinary.

Q: Could you discuss gaps you identified, such as leadership development?

Garvin: The single strongest theme we heard in our interviews was the need for MBA students to cultivate greater self-awareness. Executives said, "The more an MBA understands his or her impact on others and vice-versa, the more effective he or she will be."

The second theme we heard was the need for practical skills: how to run a meeting, make a presentation, and give performance feedback. The third theme was the need for MBAs to develop a better sense of the realities of organizations within which leaders operate. Politics—issues of power, coalitions, and hidden agendas—are part of that reality. Yet MBAs, with their analytical focus, always try to find the "right" answer. Organizations often prefer a "good enough" answer, providing it can be implemented effectively. Future leaders need to better understand the nuances of how to get things done and what they can actually accomplish in organizational settings.

Datar: The landscape of business is shifting from leaders who had high authority and faced low conflict to leaders who have lower authority and face greater conflict. Leadership skills that worked in the old model are unlikely to work today. MBAs need to understand how to work "through" people, how to motivate and inspire. That takes skill and practice. MBAs need to ask themselves, "How do I engage people to accomplish a task while I remain in the background?" At HBS, the Authentic Leadership Development course aims to teach these skills in small groups and reflective exercises.

Garvin: In addition, the required course Leadership and Corporate Accountability includes personal development exercises. Students discuss examples from their own past when they failed to rise to a moral challenge, as well as examples when someone led them to be their very best selves. As a class we try to draw general lessons from these discussions.

Q: Another gap you identified was that MBA students were not developing a global mindset. How can MBA programs better prepare students for an increasingly globalized business world?

Garvin: Executives and deans told us that MBAs need to develop cultural intelligence, specifically a better understanding of which practices, strategies, and behaviors are universal and which are contingent. When an MBA works with a person or group from another culture, how can he or she be most effective? Students need to develop a skill set rather than just knowledge about a country's economics and political system.

Datar: MBAs need to understand what it means to be a general manager in a global world and the differences in institutions, norms, cultures, and legal frameworks. It would be fascinating, for example, to have student teams work on an issue such as global branding in different countries; and share their learning with the class when they return. The reflection piece is crucial. It is important to build leadership skills in the context of a global world.

Q: What are you working on now?

Garvin: I am on sabbatical and have been travelling to interview general managers in countries such as India, Japan, China, and Mexico, to ask about the distinctive challenges of their markets and organizations. I am developing several cases based on this research for my second-year course General Management: Processes and Action. I certainly think differently about leadership and management than I did since we began researching and writing this book.

Datar: I am looking at how implementation and execution strategies vary across countries. I'm also continuing my research in microfinance. I am particularly interested in understanding how microfinance helps alleviate poverty. I am also looking at how incentive systems can be designed to promote long-run performance.