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The Big Read MBA Business education: have we reached peak MBA? Competition from online courses and rising costs have seen applications in the US fall even as demand grows in Asia and Europe © A decision-making exercise during an MBA course on Innovation Managerment and Design Thinking Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save to myFT Jonathan Moules and Andrew Jack in London 5 hours ago Print this page 10 At its peak, the University of Iowa’s Tippie College of Business enrolled 240 20-something high achievers each year on its core MBA programme. Today, the flagship public research university, with one of the oldest and highest-ranked US business schools, is down to its last 35 students. When this cohort submits their final dissertations in May, the two-year course will close, 57 years after it was launched as the university’s flagship business masters qualification. It is the end of an era for Tippie’s dean, Sarah Fisher Gardial, who had the unenviable job of announcing the course’s closure 14 months ago. Tippie’s dean, Sarah Fisher Gardial, had the unenviable job of announcing the closure of her institution’s MBA course 14 months ago The surprise move — at the time, Tippie was ranked 84th in the FT’s global list of top MBA programmes — sparked anger from students, faculty staff and alumni. Those who had completed the qualification appeared most upset, outraged at what they saw as a sudden devaluation in what was for them a considerable investment, both in terms of tuition costs and time away from the workplace. “Social media blew up on us,” Ms Gardial says about the hundreds of former Tippie students that took to Twitter and Facebook to vent their anger. “It was an emotional [reaction] with them that we could not fix.” The closure of such a highly regarded course suggests that those rising up through the ranks have lost some faith in the qualification, put off by the time commitment and expense of studying for a degree whose tuition fees now run into six figures at most top US business schools. Many are opting instead for shorter courses that cost less money or decide not to study for an MBA at all. Few have gone as far as Tippie, but there is an expectation that others will also close their programmes in the coming years. Some leading universities, such as King’s College London, have opened business schools without an MBA option, claiming that their corporate advisers no longer see a need for such a qualification. The Pappajohn Business Building at the Tippie College of Business, University of Iowa The fate of the MBA has a significance beyond its importance commercially to a business school, according to Ms Gardial, who says that the Tippie degree was losing $1.5m a year when the decision to close it was made. “It was a difficult decision for me because the MBA is very close to my heart,” Ms Gardial says, noting that her first management role in academia was running the full-time MBA course at the University of Tennessee. “But that is not a good enough reason to keep it going.” The first MBA, devised at Harvard Business School as a generalist management degree, dates back to 1908. It combined classes in “quant” subjects, such as finance and accounting, with courses in soft skills, including leadership, entrepreneurship and communication.
Graduates from the Leonard N Stern School of Business during their commencement ceremony at Yankee Stadium in New York © AP The first curriculum was based on Frederick Winslow Taylor’s principles of scientific management and quickly gained traction, with the number of students taking the course at Harvard rising from 80 in 1908 to 1,070 by 1930. It was adopted by other fledgling business schools across the US, making the MBA a staging post for many in search of the American dream. But for the past four years, interest in the full-time MBA course has been on the decline in the country of its birth. Highly ranked schools in other countries are taking note. “I think the MBA has peaked,” says Arnoud de Meyer, former dean of Insead, Europe’s highest ranked school, and now president of Singapore Management University. “There were a few very good years in the US in the 1980s. Then with the emergence of European MBAs there was an explosion of the good, the bad and the ugly. Now we have a bit of rationalisation.” This year 70 per cent of US schools with full-time MBA degrees reported declines in applications for their two-year programmes, according to figures compiled by the Graduate Management Admissions Council. That was offset by growth of 8.9 per cent in business school applications in the Asia Pacific region, a 7.7 per cent rise in Canada and a 3.2 per cent increase among institutions in Europe. Sangeet Chowfla, GMAC’s president and chief executive, puts a positive spin on the numbers, by saying that the overall demand for graduate management education was now “stable”. But like-for-like comparisons by GMAC showed a 0.02 per cent decline year on year, with 52 per cent of programmes reporting declining application volumes. The deans of US business schools had blamed previous declines in the MBA market overall on a “flight to quality”, in which students, keen to get the best return on their total course costs — which run to over $200,000 for the two-year programme at Stanford Graduate School of Management, for instance — limited their interest to a few highly ranked schools. But the 2018 figures showed that demand for MBA places also fell at first-tier institutions, such as Harvard, Duke University’s Fuqua School of Business and Berkeley’s Haas School of Business. Huntsman Hall Wharton Business School Some have even blamed the fall-off in numbers on Donald Trump’s presidency and the impression that the US is closing its door on overseas students, which make up a significant proportion of many MBA cohorts. But the problem predates the current White House administration. Bill Boulding, dean of Fuqua, where MBA applications are down 6 per cent this year, says it would be “too strong” to pin the decline on Mr Trump. While not dismissing the impact of the president’s anti-immigrant rhetoric he believes a bigger factor has been the longer term tightening in work visas for foreign students, who are now choosing to apply to schools in Canada, Australia and Europe. “That has been building over a number of years,” Mr Boulding says, adding that he expects other lower tier US schools to close their MBA programmes in the future.