The Business School Bubble
Factors like online learning, steepening tuition costs, and questions about the value and return on the MBA investment, are forcing business school to hang in the balance. 39% of traditional two-year MBA programs reported flat or decreasing application volume in 2014, according to the Graduate Management Admission Council. The majority of companies report that they are not satisfied with the skills and performance of incoming graduates, spending billions of dollars every year to retrain them. And further, some speculate, at an extreme, that half of the business schools in the U.S. could close their doors in five or 10 years.
How does a business school stay afloat and position itself to ride the rising tide of transformation?
They don’t have to look far.
Think about it. Today, most business schools are run like schools have always been run. Focus on faculty research projects often comes first. Faculty are locked into tenure tracks where it can be difficult to optimize performance in a way that best serves students. Efforts to connect curriculum to the front lines of business can take a back seat along with connecting graduate outcomes in the workforce to program values.
This may be the prevailing model, but it doesn’t have to be the only one. In order to survive and thrive, business schools must look inward and take a lesson from the very business practices they teach.
The Customer is King
The business schools of the future will put the student first and make it their mission to deliver the highest possible value with the highest possible returns for the customer. Most businesses have a laser-like customer service focus and those that don’t often cease to exist. Why shouldn’t schools be held to the same standard? A college degree is the second largest investment most people make in a lifetime. Students are paying customers, and they are spending big. That’s why rigorously measuring the satisfaction of the student-as-customer will be a differentiating factor essential to the success and survival of business programs everywhere.
Of course, student satisfaction doesn’t mean easy grades; it means open ears and a continual feedback loop. At the Jack Welch Management Institute, we track the metric Net Promoter Score commonly used in the service industry to measure customer loyalty and satisfaction quarterly. We collect feedback on our NPS survey and receive a clear roadmap of what aspects of the program we need to enhance to make our students more satisfied with their experience. We then use these results to create immediate action plans and communicate the specific changes we’ve made back to the students, so they know their voices have been heard.
Differentiation Trumps Tenure
To better serve the student-customer, faculty teaching performance must be treated as a true meritocracy. Traditional tenure tracks work against such an objective by favoring faculty members who are more focused on publishing than teaching. If faculty underwhelm and underperform, they still have a velvet coffin. Most organizations could never run this way. Why should business schools be an exception?
For us, it’s simple — in running our MBA, we practice what we teach. We prefer to organize our faculty team in a way that is purely and continually performance-based. Through a combination of a faculty-designed charter of agreed-upon values and behaviors, completely anonymous student feedback loops, and a candid appraisal system for evaluations, we measure and differentiate our faculty on how they are performing each quarter. When we put them on an axis together, we know who’s a rock star, and we are aware of who is struggling.
More importantly, they know it too.
Sound familiar? Another “steal” from business. Differentiation is a tool widely used in companies across the world. While such ranking isn’t without controversy, we believe that giving people good coaching along with an honest understanding of where they stand and if they are meeting expectations is the most fair, effective, and, yes, kind, evaluation system out there. A system that will ultimately benefit business schools and their customers.
Change is Already Here
Most businesses use Return on Investment as an important gauge of whether they are delivering value. Business schools should do the same. After all, they teach this important concept.
By measuring real indicators like student and alumni salary increases, promotions, and employer satisfaction with graduates, business schools can prove their true worth to the world. Proof that prospective students will increasingly ask for as the space becomes more competitive.
If you’re Harvard or Wharton, you’re probably not going anywhere, but if you’re not one of the few elites, change before you have to. Consider the real-world performance of your students as a driver of your value.
So business school, take a lesson on organizational effectiveness from your own content. The students are your customers. Faculty are your team to manage. And the game is all about creating value and return on investment. Look inside any MBA, look inside any company. It could be the ripest ground for finding the disruptive practices and competitive edge that will ensure your organization doesn’t burst with the b-school bubble.
It’s where we found ours.