Wow: applications are way down at MBA programs. According to this report in the Wall Street Journal, applications for full-time MBA programs dropped once again for the fourth straight year.
A survey of hundreds of programs just released by the Graduate Management Admission Council (GMAC – the folks who administer the GMAT test) revealed that median MBA program applications are down a whopping 22 per cent this year. That’s following a drop of 10 per cent last year. Granted, this is coming off all-time highs in applications in the late 2000s, but we’re looking at a nasty trend-line nonetheless.
Are MBA programs going away? Hardly. We’re still looking at over 250,000 MBA students enrolled in over 1,100 graduate business schools in the U.S., with roughly 100,000 MBA degrees granted each year.
Just the same, this dramatic drop in student demand for the traditional 2-year, full-time MBA education made me sit up and ask why. Are these schools still producing young managers with the skills and capabilities that employers want?
I have an unusual perspective on this, since I meet hundreds of new MBAs a year where I teach, keep in touch with many of them post-graduation, and speak with dozens of big-company executives regularly.
Here’s the consistent theme I hear from corporate recruiters: they’re looking for an MBA who knows how to work in teams, thinks critically, communicates clearly, moves decisively and is comfortable working with ambiguity. They’re looking for an MBA who’s unafraid of going out on a limb, trying something new, failing quickly, and learning from mistakes. Hmmm…. sounds like an entrepreneur to me.
Global 2000 companies can no longer afford to hire yes-women and yes-men who blindly toe the line. Regardless of the industry, the combination of the global marketplace, competitive environment and customer expectations simply evolve too rapidly to allow for complacent management.
Not too long ago, the typical big company would squash new ideas by insisting on endless additional justification for a new proposal – or worse yet, by forming a committee, a surefire way to kill innovation. To use a skiing metaphor, everyone skied with their knees locked, slowly and cautiously. New managers who arrived skiing loosely soon found their knees calcified in one position. Nobody fell, because no one took any chances. Things moved slowly, and – surprise – markets were consistently lost to more spry, entrepreneurial competitors.
Fast forward to today and what I see is notably different in so many major companies. There’s a refreshing willingness to take risks – and an understanding that it’s necessary for survival. Individuals and teams operating more loosely and fluidly, keeping their knees bent, able to much more responsively sense threats and opportunities, adjust speed, shift direction and respond to market openings more proactively.
The b-school programs that will be most relevant in the years ahead are those that teach folks to ski with their knees bent, to challenge themselves and their colleagues, and to trust their instincts and intellect. The winning programs will be those that turn out MBAs who’ve worked in varied and diverse teams, experienced real-world problem-solving, and been trained to think like entrepreneurs.
Jim Price is a serial entrepreneur and Adjunct Lecturer of Entrepreneurial Studies at the Zell Lurie Institute at The University of Michigan Ross School of Business. ©2012, James D. Price.
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