Why the MBA needs to go back to school

The MBA degree is more than 100 years old. According to www.mba.com, it was first introduced by the Harvard University Graduate School of Administration in 1908 (now the Harvard Business School), and was created in response to the growing demand from businesses for formally-educated managers during a time of rapid industrialisation in the US.

That 1908 MBA degree – short for Master of Business Administration – at the Harvard lasted for two years (much like present day), and attracted a class of 80 students taught by 15 faculty members.

Although the MBA has been evolving over time and is taught differently in different countries, it is time for a big change, according to Prof Arvind Sahay, the new director of MDI Gurgaon – who was previously faculty at IIM Ahmedabad.

“The MBA degree is more than 100 years old, and at its core is still not very different from what it was 50 or even 75 years ago,” Prof Sahay told FE. “Let’s break down the challenges it faces, and how it can be reinvented.”

1. There is an increasing need for graduates to have a higher level of hard skills along with soft skills. In the US, apart from the top-10 or top-15 institutions, applications and enrolments in MBA programmes have declined. Simultaneously, applications and enrolments in programmes like Masters in Finance, Masters in Marketing, Masters in Data Science have increased. The beginning of this trend is visible in India as well.

2. As artificial intelligence (AI) makes large inroads in providing inputs into the management process, some simple extrapolations suggest that the basic MBA level knowledge (for example, what is a debit or credit and why it matters, bullwhip effect, 4Ps of marketing, dynamic capabilities framework, etc) will be easily available for ‘free’, and the value-add will come not from the content, but from critical thinking and analysis, and the ability to synthesise and connect the dots.

3. Recruiter thinking at the entry level (which is where most Indian MBAs go) is driven by immediate needs; academic preparation is for the long term as well. This temporal mismatch of priorities leads to a dynamic tension between recruiters and business schools. The higher-ranked schools have some advantage here due to the perceived higher calibre intake of students.

4. Recruiters would like to have – in addition to skills such as critical thinking and analysis, and the ability to synthesise and connect the dots – skills such as data visualisation, programming in R, Excel, PowerPoint, and so on. It is becoming harder to provide all of those within a single degree.

5. As the world goes through a momentous geopolitical and technological shift where two superpowers need to equilibrate, and each business graduate needs to be digitally- and technologically-savvy, the importance having core courses on topical areas like AI & cybersecurity, and geopolitics & government and its impact on business increases. Business schools, therefore, need to carry out some reorientation in their core curriculum in terms of the relative proportion of content coverage across areas. Arguably, the distance between business schools and the schools of public policy and governance will decrease.

6. Residential business schools will also need to provide other forms of value in addition to content, access to recruiters, and a social network.

What form these new forms of value will take remains to be seen.

Prof Scott Beardsley, the dean of the University of Virginia Darden School of Business, had recently shared with FE that the MBA degree should start to apply the “Socratic method” of education delivery. “At Darden, we use the Socratic method, or case-driven teaching, in which we challenge our students to situate themselves within a business, educational or personal scenario, and find a solution to a problem,” he said. “It’s different from the traditional lecture-based approach, as it brings real-life scenarios into the classroom. It puts students into the driver’s seat as they try and solve a business problem somebody else is facing. The faculty member is the one asking questions – bringing out the best in students.”

What existed before MBA?

According to www.mba.com, although the Harvard was the first university to offer a degree called MBA, the concept of formal business education had emerged in Europe a century earlier, and the world’s first business school is the Ecole Spéciale de Commerce et d’Industrie (today known as the ESCP Business School), which was established in Paris in 1819.