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Recognising the relevance of business schools in today’s disruption

Professor RT Mpofu, Acting Executive Dean at Unisa’s Graduate School of Business Leadership (SBL)

Professor RT Mpofu, Acting Executive Dean  at Unisa’s Graduate School of Business Leadership (SBL) which next year celebrates its fifty-fifth anniversary, weighs in on the current conversations around the declining value of the MBA and the impact on business schools in today’s business environment.

The current business education discourse is fixated on questions around the value of the MBA and its true benefit to the world of business.  This is in light of reports describing a sharp decline in applications at many United States’ business schools, with as many as 52% of programmes reporting a drop in application volumes last year.  

The most extreme consequence of falling numbers is complete closure of the MBA programme, as evidenced at the University of Iowa’s Tippie College of Business when it ended its two-year course in May last year.  

As far back as 2006, the London School of Economics excluded the MBA qualification when it first launched its business department.  Following suit more recently, King’s College London sought not to offer the MBA programme when it launched its King’s Business School in 2017, with the new dean (Stephen Bach) claiming that there was not enough interest in the programme.

A variety of factors touted as undermining the value of the MBA programme include the rising cost of tuition; competition from online MBA degrees and shorter, more accessible business courses; and even a drop in prestige.  Perhaps the most important factor is its relevance in today’s fast-changing, disruptive business environment.

Yet a mere five years ago the MBA took the top spot as the most popular advanced degree.  What has changed?

Firstly, it is worth noting that declining numbers which are bandied about the media are localised to those developed education markets in the United States and the United Kingdom, and do not necessarily represent the broader picture.  In 2018, there was an increase in applications in the Asia Pacific region by 8.9%, and in Canada by 7.7%.  In European
institutions there was a slight increase of 3.2%.

Secondly, it is worth considering the MBA in light of the changing face of business schools.  

Ensuring form follows function

The sophistication of business increased rapidly in the twentieth century as new markets were developed along with a growing workforce.  Business schools saw the opportunity to leverage the gap in graduate education beyond economic theory and (the relatively-new) marketing discourse to provide a coordinated and systematic approach to business including varied and evolving disciplines from finance to human resources.  

It should be borne in mind that the MBA was never designed as an intellectual product.  The goal was to help the company transform, become more productive and profitable, and to add value for its shareholders.  This was done by providing managers with a fair degree of education and good understanding of business, with skills that would enable them to implement strategic decisions across the spectrum of business operations.  Particularly in the latter part of the last century, when ‘big’ businesses began expanding into new markets across the globe, the MBA became a sought-after and premium-priced qualification.

Today, the MBA remains relevant.  Although companies now operate in an incredibly fast-paced market driven by flux and disruptive forces, business strategy must still lead to a certain result (amongst others, drive profit and derive shareholder value) based on certain decisions.  

The difference lies in the tools of business.  The twentieth century’s linear production line has evolved into a complexity of automated processes that are increasingly harnessing exponential technologies such as artificial intelligence (AI) and big data.  There is a growing mix of intellectual and intangible products that were not available a mere five years ago.   

However, decision-makers are stymied if they cannot understand what the impact of new tools and technologies will be on their companies or departments.  In this context it becomes a question of what content the MBA emphasises and how this content is taught. Any business degree – not just the MBA – should be focused on introducing new specialised areas as their application becomes mainstream.

Innovation trumps prestige
The relevance of the MBA leads into the discussion around the notion of business schools.  I would posit that the United States, birthplace of the MBA, is clinging to an outdated notion of the prestigious business school from which a young graduate is guaranteed a C-suite future.  “Why do we need 10,000 business schools in the world?” a Yale professor was quoted as saying in the Financial Times last year.

A recent article on business school rankings for 2019 noted that the list contained fewer ivy league universities.  The reason cited was that these rankings no longer provide the schools with what they are looking for.  Arguably ivy league schools are seeing a decline in numbers because prestige is losing ground to relevance and innovation, particularly given the cost of tuition at such schools.   Business schools should be less about exclusivity and more on creating a compelling place for business learning.  

As business dynamics change a number of schools are beginning to incorporate transformative programmes such as entrepreneurship and development.  Interesting business school models are beginning to emerge.  For example, the University of Toronto’s Rotman School of Management, which produces the most MBA graduates in Canada, has a strong link to the university’s school of commerce which enables shared resources and cross-pollination.  This gives exposure of the business school’s opportunities to under graduates and is fast encouraging a new generation of post-graduate students.  

The South African context

As a business school, we cannot ignore the burning socio-economic crises in this country, such as our crippling levels of unemployment.  We should be considering how research findings on job creation and unemployment can inform the fine-tuning of programmes such as the MBA to encourage innovative, solution-focused graduates.  

For business schools and universities around the world, there is a growing interest in the development of business incubators for their students.  This is also slowly beginning to take root in South Africa.  

At the SBL we are collaborating with Unisa to form a post-graduate business incubator by 2020, that will focus on the areas of science and technology, agriculture and environmental sciences.  Working closely with the university’s other colleges we plan to develop a robust incubator model that combines business sciences with technical skills. By layering a programme such as the MBA with a specialist technical qualification will enrich knowledge that can ultimately support job creation.  This is what our continent needs.

Additionally, business schools should look at extending their impact by working with key organisations that have a wide community reach.  For example, the SBL last year committed to working with the National Federated Chamber of Commerce and Industry (NAFCOC).  The organisation has a membership of 500,000 SMEs with the majority of members operating supermarkets in townships and rural areas; an economy that runs into billions of rands.  In South Africa it seems to me to make good sense that as the custodians of business education, we focus less on prestige and more on innovation, working together with people who are key in driving economic development.  The position is, we are a school of business, but we associate with your needs.  Now that is relevance.

Publish date: 2019/05/30