the back-to-the-future MBA, or for $100,000 they get what, exactly?

The other day, I noted this LA Times review of a new book by Augier and March on b-school education. Like most of you, my livelihood depends upon the MBA trade and, as a result, I try to keep an eye on industry developments. In the last year or two, many have begun to sound warnings that the higher education market may be in the bubble-about-to-pop state (e.g., here, here and here). My sense is that the long-term prospects of the MBA market are also worrisome (some initial musings are posted here).

It seems the chances are fairly good that MBA tuition is headed for a downward adjustment. In that world, budgets will get tight, teaching loads will go up, and more of us will dial- rather than fly-in to conferences in far-flung corners of the world. Since most of us are passionate about our work, if it does come to that, I expect we’ll mostly make do.  What concerns me more is the widening gap between our research and our teaching … not just in terms of quality and quantity, but also in terms of the very motivation for a graduate business education. What is the coherent business model that supports the delivery of business education by research faculty? Scratch the surface of most b-school deans on this question and the answer revealed will be exceedingly lame. This is unfortunate because, without a crystal-clear vision of why the higher costing researcher-delivery model should command a higher degree price, we will all face worse than a temporary belt-tightening.

As mentioned in my first post here, I initially went the MBA route (Chicago ’81) and worked for over a decade doing real-world management before diving in to academia. Those were the halcyon days of research-backed b-school education. The motivation for an education of this form went something like this: (1) general principles of business management can (and will) be discovered via the scientific method; (2) general principles can (and should) be gainfully applied across industries, jobs, and time; and, therefore, (3) a graduate education delivered by the folks actually engaged in the discovery process has value.

So, we read 30-40 academic journal articles per class. We became capable of digesting their content and, thereby, able to access new ideas 10-20 years ahead of widespread practice. We traced the trajectories of core research streams and, thus, came to recognize that subtle thinking is required of complex issues. We jammed into Merton Miller’s class, not because he was entertaining or capable of summarizing complex ideas into exquisite 10-bullet lists, but because everyone knew he was a genius and felt damn lucky to sit in his presence and glimpse into his thinking about finance. Excerpts from books by Tom Peters and other management “gurus” were not viewed as examples of special wisdom but, more accurately, of sloppy, shallow, unsubstantiated pap. That was a bad-ass education — one that served us well throughout our careers, not just in our next jobs.

What happened? Well, Business Week rankings coupled with the “Northwestern Innovation.” BW rated schools on: (1) student satisfaction, (2) recruiter assessment, and (3) research ranking. Northwestern, which was not a contender back then, realized that moving (2) or (3) could only happen veeery slooowly. Item (1), on the other hand, well, that could be manipulated almost instantaneously. And thus began the race to the bottom of the toilet. As far as I can tell, anything approaching the education I got has long since been abandoned.

Which brings me back to the LA Times review. What caught my eye was this parting comment, “And there is also a nagging feeling that by concentrating on scientific and academic rigor, something vitally important — experiential knowledge — has been left out of management education.” First of all, the premise — that modern MBA education is scientific and academically rigorous — makes me LOL. Try teaching a first year, non-elective/core class in which your students are expected to read and understand 40 academic papers. I guarantee you’ll have a riot on your hands (not to mention multiple visits from at least a few of the multitude of deans supported by all your hard work).

Second, we can all agree that experiential knowledge is vitally important to success in business. It is. Here’s the catch: the most efficient provider of experiential knowledge is … business! It is surely unnecessary for a student to fork over $100k to a university for such knowledge when firms will gladly provide it with pay. Similarly, there are more efficient sources of social networking opportunities, outplacement services, and so on.

To be viable in the long-run, those of us at research institutions must provide an education that is not only valuable, but is also one that we are uniquely efficient at delivering. Like Chicago, 1981. True, such an education is not for everyone. And it may not support monster-sized student bodies (or the attendant administrative bloat). But, from my vantage point, we either get serious about graduate education again or cede the game to others.

The Anti-Northwestern strategy awaits. Who will step up?

@mdryall