Crunch This; B-Schools Rebound from an Identity Crisis

By Pepper, Tara | Newsweek International, August 21, 2006 | Go to article overview
Save to active project

Crunch This; B-Schools Rebound from an Identity Crisis


Pepper, Tara, Newsweek International


Byline: Tara Pepper

One little-known aftershock of the corporate scandals that began with Enron was an M.B.A. backlash. At a time when companies were scrutinizing every penny they spent, they also questioned the value of advanced business degrees, once seen as a ticket to the fast track in the business world. The scandals were the "tipping point," says Joel Podolny, dean of the Yale School of Management. Afterward, as companies began to hire fewer M.B.A.s at lower pay scales, applications to business schools worldwide fell dramatically, by 20 percent between 2002 and 2005. The result was an industrywide identity crisis, which had insiders questioning every aspect of their schools and reaching a brutal verdict: they had flunked Business 101, failing to keep up with change or to respond to consumer demands.

Now there's a sense that the worst is past. After a bout of internal reform that saw, for example, the Yale School of Management unveil an entirely new curriculum last year, the numbers are back up. In the United States, B-school applications and enrollments are rising again, according to an industry survey released this month. Worldwide, corporate demand for new M.B.A.s has risen healthily this year (by 24 percent) for the first time since 2002. So have the salaries paid to newly hired M.B.A.s, which have increased by an average 7.5 percent, according to a survey by TopMBA.com of 445 companies, also released this month. "It's been a very strong recovery, with particularly high demand in consulting and financial services," says Nunzio Quacquarelli, editor of TopMBA.com.

In general, the reform movement has been about bringing the B-school course of study out of the academic weeds and back into the real world. The standard M.B.A. curriculum emerged in the wake of the Ford Foundation's 1959 report "Higher Education for Business," which laid the outlines for a research-based business education. Since most managers spent their careers in one field, whether finance or marketing, teaching focused on specific skills. Business professors, wanting their discipline to be taken as serious "science" by others in the university system, focused on narrow, quantitative courses. The result was ever more specialized M.B.A.s entering a market that increasingly asked them for flexibility, innovation and an ability to work across cultures and disciplines. "There was a major disconnect between what they were taught and trained for, and what they were asked to do by recruiters," says Podolny.

As B-schools were all competing to be more rigorously quantitative, they were also increasingly alike. None had a truly unique brand, even if they all taught the importance of branding. The result was what Frank Brown, incoming dean at INSEAD, the top business school in Europe, calls "the commoditization of the M.B.A." Not only was there little differentiation among the top 12 schools, but they generally did a poor job "delivering value." And that complaint still resonates: "I've spoken to Wall Street CEOs who ask, 'Why should we worry about hiring M.B.A.s--what exactly is it getting us?' " says Brown. "The M.B.A. used to be a credential, a requirement for being a senior manager or a CFO. Now it's nice to have, but people are beginning to ask what it really does for them."

Brown, who came to INSEAD from a consulting career, typifies the trend at top schools, which is to break out of academic niches. Brown says his goal is to make INSEAD a "leadership institution," not a training ground for specialists, and many of his peers make similar noises. Yale's new curriculum breaks down traditional boundaries between disciplines--for example, by focusing marketing courses not on the nuts and bolts of how to calculate a new product's "value proposition," but on how to understand consumer motivations using economics, psychology, sociology and marketing.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Crunch This; B-Schools Rebound from an Identity Crisis
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?