Tuesday, September 16, 2014

Will MBA programs become unbundled?

Poets and Quants editor John Byrne has an interesting piece in USAToday regarding how technological disruption is likely to affect MBA programs.  Right now a good MBA program is a bundle of services that create value for students.  It starts with instruction from great professors, but also includes career coaching, networking with alumni and fellow students, and placement services.

MOOCs already threaten the instruction part of the bundle.  In the not-to-distant future, business students will be able to obtain certificates of completion for all MBA core subjects plus a mix of electives in mainstream subjects such as finance and marketing.  Byrne thinks that free MOOCs will quickly put MBA programs that lack strong career services and networking out of business.

Byrne does not address the possibility that other providers will step up and provide coaching, job contacts, and networking.  Students pay a hefty premium to get into the very top MBA programs.  The academic content of the core MBA courses is pretty much the same across all institutions, which implies that the perceived value of the nonacademics is driving the price premium.

This leaves open the question of how communication and leadership skills are developed.  These skills are #1 on the list of MBA recruiters.  Many of the top schools restrict admission to students with strong skills in this dimension; employers use a degree from those schools as a signal that the student possesses those skills.  Other schools invest heavily in training that changes student behavior.

My take: I am skeptical that MOOCs will be very helpful for developing the so-called "soft skills." Schools that take those skills seriously should be able to stay in business, and perhaps even prosper.

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