Some business schools are shutting down their on-campus MBA programs

https://www.forbes.com/sites/poetsandquants/2019/05/26/why-business-schools-are-shutting-down-their-mba-programs/

by hhs • 7 years ago

92 56 7 years ago

dahart4• 7 years ago

Tl;dr on-campus programs are in decline while online programs are growing. Seems like the title is a tad misleading, the programs aren’t shutting down, they’re going online.

But isn’t a lot of the value of an MBA in the face time and networking you get during the program? (Or is that a myth or only something that happens at Harvard?) Every once in a while I think about going back and getting an MBA, speculating it might help with my next startup, but I’ve always imagined going to campus. Are online tools and online degrees improving in the areas of having class discussions and making friends and asking questions and general people time?

lotsofpulp2• 7 years ago

It’s not a myth, top MBA programs are top because they give you access to an exclusive network. Personally, I wouldn’t value an MBA much without that aspect.

amb23• 7 years ago

US MBA programs need to start following the European model: Year-long to 16 month programs tailored to a slightly older demographic (late 20s to 30s) who actually need a degree to move a rung higher in their career. The shorter program length will decrease the costs for students (both in terms of tuition & opportunity costs) and--based on how much travel my friends currently pursing MBAs do during the academic year--is unlikely to hurt academic outcomes.

There are a few MBA ROI calculators online, and for my career I wouldn't see an ROI until ~20-25 years down the line. (For context, I'd probably gain a ~30k salary increase if I were to pursue an MBA.) And that's with consistent salary growth with no sabbaticals or career changes (and any subsequent loss in earning potential) I might want to pursue. I would love to use a year long program to gain some needed financial modeling, HR, and operational skills while taking the time to pursue a business idea, but the traditional programs are not structured to accommodate that. And besides, you don't actually need an MBA if you work in the tech industry until you're in a senior position--VP or C-suite--so there's no direct need for the degree itself until ~10-15 years in the future.

arcanus• 7 years ago

And besides, you don't actually need an MBA if you work in the tech industry until you're in a senior position--VP or C-suite

You certainty do not need an MBA to reach executive level in American technology companies. Just a few CEO examples off the top of my head:

Eric Schmidt (Google) has a PhD.

Dara Khosrowshahi (Uber) has 'just' a BS.

Ginni Rometty (IBM) also has no postgraduate education.

I strongly suspect a minority of executives in tech have MBAs. I don't have anything against the MBA (my father and wife have them) but it's by no means necessary.

jayalpha• 7 years ago

"US MBA programs need to start following the European model"

No they don't. I, as a dual citizen, think US programs are by far superior.

"And besides, you don't actually need an MBA if you work in the tech industry"

"How to value your start-up? Add 1 Million for every engineer, subtract 500k for every MBA" Guy Kawasaki

rchaud3• 7 years ago

The Guy Kawasaki quote is absurd when you consider that US startups bleed cash all the way up to and often well past their IPO. You best believe that the banks who are out there selling a fantastical vision of a startup's future profitability have MBAs in their team. They're the ones making the engineers' equity worth something.

rahimnathwani2• 7 years ago

The two existing comments are from people who are considering an MBA at some point, so perhaps these thoughts are helpful:

- Doing a full time MBA at a top school (or any school) is a large commitment of time and money. If your aim is to start a business, then it's worth considering what you could achieve with the same amount of time+money invested in getting that business started. If your aim is to get a promotion then, again, it's worth considering the opportunity cost.

- Some of the things you'll learn during the MBA can easily be learned on your own. But 90% of us usually only study the stuff we find most interesting or most immediately relevant. An MBA is a good mechanism to force some breadth.

- The people who get most out of an MBA (from what I've saw at my school, and other people I know) are those who have a clear goal, and have done some research beforehand about how an MBA from their chosen school will help them to get there. Those people also spent a significant portion of their time researching jobs, and trying to meet people to get leads. They didn't just focus on the classes until near graduation, and then apply via standard processes. They were focused on their goal (e.g. 'M&A Associate position at a top-tier investment bank') from the first day, until they got their job offer.

- There are plenty of people who pursue a full-time MBA as a 'break' from work, or because they want to learn a set of skills they can apply in their existing or future business, or because their employer (e.g. investment bank, or top-tier consulting firm) expects it and pays for it, or even just for fun. These are all acceptable reasons. But pursuing an MBA because you think it's a magic solution to $current_career_problem probably won't end well[0].

[0] This last part might be incorrect if you end up at a top school. Like, maybe if you do an MBA at Harvard you won't even need to apply for jobs, and people will come knocking on your door. I don't know. But I suspect the intersection of people who (i) get into HBS, and (ii) have unrealistic expectations of what a piece of paper can do for their career, is pretty small.

dvtrn• 7 years ago

But pursuing an MBA because you think it's a magic solution to $current_career_problem probably won't end well[0].

I've watched a few people enter STEM for the same reason and very quickly burn out. Arguably holding an MBA and making good use of it, or starting a career in STEM and finding a niche (dev, design, ux, what-have-you) certainly has the upshot of potentially larger incomes, but just in passive observation I've watched friends go to bootcamps or take an online class, slap it on a resume and just expect the jobs to start showing up-grow frustrated when they don't, or they get rejected from interviews and return to their former careers tail between their legs.

It's not fun to behold.

There's probably an economic/era of data/wage-stagnation argument to be made here-that has people racing madly to these career fields, I'm just not qualified on the topic to figure out how to make it.

dahart4• 7 years ago

If your aim is to start a business, then it's worth considering what you could achieve with the same amount of time+money invested in getting that business started.

I’m not sure how to even begin evaluating opportunity cost.

I started a business, and had a successful exit, and I’m still considering the MBA for the next time. The reasons include: as an engineering founder I undervalued marketing dramatically and don’t know how to do it well, and I had a hard time speaking the language of investors. I want to add skills to my quiver that I found missing when I needed them.

How would you suggest thinking about opportunity cost, especially if you lack experience in one or both options? In order to make starting a business more valuable than school, I feel like you have to either be much luckier or know what you’re doing and execute perfectly, which is incredibly hard to do the first time. The things I spent time on as a first time founder are things I think I would have learned not to do in business school. It worked out for me only because I got lucky, but I did burn a few years and a lot of money. After having chosen to start a business instead of school, I feel like it might have been more efficient to go to school.

rchaud3• 7 years ago

I undervalued marketing dramatically and don’t know how to do it well, and I had a hard time speaking the language of investors.

These are all valid reasons, but I thought I'd mention that you may be able to get answers to some of these questions by reachig out to a local uni's MBA program.

Ask if they're looking to connect students with businesses as part of their capstone project. MBA students usually do a semester-long capstone where they work with a real business to develop marketing plans, pitches, product roadmaps, etc. It might be interesting to run a cohort of prospective MBAs through some of the scenarios you faced as a founder and see how they approach it.

rahimnathwani2• 7 years ago

"I want to add skills to my quiver that I found missing when I needed them."

This is a really good reason. What are those skills? Would attending business school help you build all/some of them?

"I’m not sure how to even begin evaluating opportunity cost."

If I were to give you $100k, on the condition that you spend the next 18-24 months doing only things that would help you build those skills, what would you do with that time? Start a business? Take smart people out for dinner? Get a job at a company you admire, and spend the cash on making your life more comfortable? Sign up for a degree program?

vikramkr• 7 years ago

Most of the value in an MBA is from the face to face interaction and networking - the classes in business school are helpful sure but nothing you can't learn yourself in a book. If these schools weren't able to offer much in the way of networking and development of soft skills in the first place, then frankly going online makes sense because you don't lose anything, but i think that's a factor specific to these business schools, not the very top bschools that have no shortage of funding/extensive networks etc.

analog31• 7 years ago

I think there are a couple other values as well. Maybe this is similar to "networking," but there is a certain standardization that makes it easier to hire an MBA and plug them into a business that has already adopted the MBA business culture and methods. It also brings everybody up to a decent level in a variety of areas. Some folks may need to brush up on their quantitative skills, others on literacy, negotiation, etc.

Empirical example from talking to a number of MBA's: They all have the same beliefs about things like the purpose of the corporation, how to motivate people, and so forth.

povertyworld• 7 years ago

Is it possible some corporations just have MBA requirements for advancement? Then it doesn't matter where you got the degree from just that you have it. I know this is the case in education, and has lead to the proliferation of online education grad degrees. Since you just need the piece of paper, most careerists optimize for the easiest online "mail order" type degree possible. They don't, however, optimize for cheapest, since tax payers bankroll most of these cheesy degrees through tuition reimbursement.

delfinom• 7 years ago

MBA used to be an requirement for an engineer to jump into manager roles. But nowadays it depends on the company.

mcmoose754• 7 years ago

I went to one of the top-tier (top 3) MBA programs in the US.

The way I've described that value of the top MBA programs is in 3 (roughly equally-weighted) categories:

1) The Education: Getting to discuss business concepts with a group of smart, successful folks for 6-9 hours a day is very helpful. Most of the content, I could get from books/ online articles at a fraction of the price, but spending the time in a focused way is actually helpful.

2) The Network: In terms of network, this isn't some vague amorphous thing at Stanford GSB, HBS, or Penn- it's knowing several hundred other folks who are going to be very successful in their careers. This can be useful in sales, fundraising, finding a next job, etc. and DOES have a tangible dollar value.

3) The Rubber Stamp: Having your resume say "Stanford GSB" or "Harvard Business School" does have value to future employers or customers- it de-risks you as you've been validated by a famous institution, and helps THEM to associate with these famous brands.

For the top 3 programs, even though they're VERY expensive (approx $250k in tuition + living expenses, plus at least another $250k in foregone income for most incoming students, for $500k in actual cost+opportunity cost), they're almost certainly worth it.

For middle-/ lower-tier MBA programs, 2) and 3) above aren't NEARLY as valuable, or perhaps don't even exist- is your "network" from Podunk State School MBA actually valuable? For these, the only real value is the actual education, and most students would be better served with an online program or just actually picking up some books/ case studies/ reading online articles.

purplezooey• 7 years ago

Podunk State School, eh?

mcmoose754• 7 years ago

That's probably overly dismissive. Obviously state schools are super valuable for undergrad- I went to one. I just wouldn't pay a ton of money for an MBA from one of them.

Scoundreller3• 7 years ago

This can be useful in sales, fundraising, finding a next job, etc. and DOES have a tangible dollar value.

I believe you, but I haven’t seen any school websites actually advertise an a dollar value on these human synergies.

If anyone would, you’d think it would be them.

mcmoose754• 7 years ago

The whole pitch at the elite institutions is that they don't WANT to pitch it as some sort of dollars-and-cents ROI. They want to advertise the prestige, the education, etc.

There's a whole cottage industry of MBA review sites, books, admissions prep materials, etc. that make that pitch for them, and investment banks/ consulting firms that use these MBA programs as "finishing schools" of sorts do as well.

lotsofpulp2• 7 years ago

That would be very gauche, and would net them negative PR from the overall public due to laying bare the “it’s not what you know, it’s who know” mantra for no reason. The people looking to attend these schools already know the implied value.

falcor84• 7 years ago

Here you go: http://rankings.ft.com/businessschoolrankings/global-mba-ran...

Graduating from Stanford Business School will increase your salary by 129%

mcmoose754• 7 years ago

There are a few exceptions to the above- for instance, often schools that aren't in the top 3 nationwide can punch above their weight in regional networks.

For instance, if you want to live and work in LA (or work in the entertainment industry) I've heard that it can be really useful to go to UCLA or USC for an MBA.

opportune• 7 years ago

Honestly even for Podunk State U I think you can experience the same if you plan on staying in your region in a local industry. I'm guessing an MBA from the University of X is just fine if you have a management job to go back to and want to stay in X the rest of your life. As long as there isn't some highly competitive field attracting people from all over the country you're trying to break into, applying the constraint "must stay in state X", a degree from UX might be the best place to go get your MBA

Still maybe not worth the tuition+lost income, but could be worth it

clairity• 7 years ago

yes, even though i had wanted an mba largely for #1 on your list, #2 & #3 are undeniably where the intrinsic value of an (on-campus) mba program lies. if you don’t go to a well-regarded program (i’d estimate top 20), you won’t get that intrinsic value and are probably over-paying.

it makes sense for the less regarded programs to reduce costs and reduce tuition to serve those who primarily want #1 because they can’t compete on #2 and #3 (which i would describe as prestige rather than a rubber stamp).

cm2187• 7 years ago

In the US, does the rubber stamp effect have much impact beyond the first hire?

In banking in the UK, I literally have no idea what education my colleagues have, and after a few years of experience, I feel the university is pretty much irrelevant, other than certain specific majors, if for instance they are quantitative or computer science. But I feel that an MBA would play no role in a promotion.

krapht• 7 years ago

Surely Oxbridge or LSE mean something on a consultant's resume.

chrisseaton• 7 years ago

In banking in the UK, I literally have no idea what education my colleagues have, and after a few years of experience, I feel the university is pretty much irrelevant, other than certain specific majors, if for instance they are quantitative or computer science.

Yes the UK banking sector is famous for being made up from people of a very wide range of backgrounds...

Bombthecat• 7 years ago

The big question you should ask yourself ( which did it to me) if you are driven enough to spent those dollars and time on mba, aren't you already driven enough to "make it at work" wherever you are? ( Or switch to a more prestiges firm) and yes, I di make it work. No mba. On my way creating a new division in a pretty big firm.

You are not only losing time at the mba. You are losing time learning business and creating relationships. If you selected the right firm you make inside and outside contacts already working there,while working your way up. Without taking a credit!

Just something to think about...

Joakal• 7 years ago

It could be a $6.5M answer. A rich family saw a lot of value in spending that much to send their child to Stanford. Not sure if it was for a MBA though.

rchaud3• 7 years ago

You can see from the list of names in the article why those schools are dropping on-campus programs. Some of them are prestigious institutions, but not for business:

- University of Iowa

- Wake Forest University

- Thunderbird School of Global Management

- Virginia Tech

- Simmons College

There aren't many people out there thinking, sure, I'll go into six-figure debt so my LinkedIn can say I have a Simmons College MBA. Simply put, if your on-campus MBA program isn't likely to result in a six-figure job right out of the gate, it's not worth the cost.

And those six-figure jobs only come about if big, rich companies (banks, big 4 consulting/audit, big tech) come on campus to hire MBAs. If yours is not a Top 15 MBA program, you may be better off career-wise by staying at your current job and pursuing professional certifications related to your field.

askafriend• 7 years ago

I’d take it even further. If it’s not a top 5 program then you’d really really have to think about if it’s worth doing at all.

joker3• 7 years ago

Top five is a little too strict, but top twenty, yeah, maybe.

bigtunacan• 7 years ago

It's not that simple. Take the University of Iowa as an example. The full time MBA program has seen declining enrollment and has been steadily losing money.

Conversely the PMBA program has seen increased enrollment and profits and it can be difficult to get into classes wanted/needed to complete the degree.

If you are planning to stay in Iowa the network effects of the Iowa PMBA program are pretty strong. Many of your classmates will be in leadership roles within local area businesses that you may be considering moving to at some point. Often times the students are looking to take another step up, but are lacking skills that can be provided by the degree. In many of these situations the businesses agree with this as the businesses are frequently footing the bill for tuition either in part or in full.

Students within the full-time traditional MBA programs are typically younger with less or even no professional experience. PMBA students are generally experienced professionals that have already proven a certain level of success to an organization that are then learning skills that will help them bridge a gap.

SQL2219• 7 years ago

There are 16 references in the comments about "top" programs. I am curious as to what top actually means, can I sort by the top column in a spreadsheet? Is it a code word for cost?

petronio• 7 years ago

There are a few companies that rank educational institutions and their programs by various metrics. "Top" programs are just the ones that tend to be at the top of those rankings. For MBAs, Harvard, Stanford, and UPenn's Wharton usually take the top three globally.

filmgirlcw• 7 years ago

It means Harvard, MIT, Stanford, University of Chicago, Penn — most generally.

But there are different MBA programs. There’s the traditional MBA, the part-time MBA (which is a great choice for people who already work), and the executive MBA.

bitL2• 7 years ago

Look up M7, T15 and T25 B-schools, that's how they are usually called by B-folks.

baron816• 7 years ago

Is there a lot of value in getting a non-specialized MBA if you're working in tech (or want to work in tech)?

miohtama• 7 years ago

Online MBA would be only for career signalling? Is the other side of the coin, networking, present in any form? Has anyone taken online MBA and can comment the benefits?

Ibethewalrus• 7 years ago

Interested as well about the benefits/downsides of an online MBA by a prestigious vs regular school

_sword• 7 years ago

Interestingly, institutions such as Simmons (highlighted in this article) are partnering with online education platform vendors such as 2u to bring their campus online. Using 2u as an example, the schools offload all of the marketing for candidates, managing the online platform, and more to 2u in exchange for a revenue share for tuition for online students. Schools are in turn responsible for the course content including the professors, and for their admissions department to accept or deny applications provided by 2u. The net impact for the school can be incremental revenues by addressing students that weren't accessible previously, and that these incremental revenues come with a high margin for the school, which can help fund other areas of the school. Fascinating business model in my view.

RickJWagner• 7 years ago

Anything that adds prestige and profitibility to online education is ok with me.

Traditional college education is a racket. I'm hoping online is the way of the (near) future.

bitL2• 7 years ago

IMO online MBA from a respected school is a perfect thing for entrepreneurs that need flexibility and can't just take 2-3 years off. It's also awesome for digital nomads that can literally earn degree while lying on a Hawaiian beach or traveling around the world. And if the class is massive like at UIUC (2000 people?), networking effect gets a huge multiplier, globally, comparing to much smaller classes at M7 (and FAANG is quite strongly represented there, like with Georgia Tech's OMS CS). The only problem I see is prestige, so I'll keep an eye on iMBA to see how they wrestle with rankings.

Some business schools are shutting down their on-campus MBA programs

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