The market is sending a troubling message to America's business schools. Falling applications, sliding enrollments, and declining selectivity all point to problems. The obvious culprit is the soaring price of tuition -- up to $39,100 a year at Harvard B-School -- at a time when starting MBA salaries have remained flat for years. But the meta-message may be much more serious. The market may be telling the B-schools that they are training managers for the 20th, not the 21st century. More and more corporations prefer to train their own managers in-house, but not just because of the rising cost. They also want to instill skills and values that B-schools don't, can't, or won't deal with.
For the many business schools, the speed of change in the global economy and in corporate culture may be making part of their curriculum obsolete. Outsourcing to India and China, the rise of customer power, the spread of broadband, and other huge developments are changing not only the economic context in which companies operate. They are also changing the way companies operate. CEOs of global corporations are demanding that their people be able to manage innovation teams, manage global supply chains, manage strategic design, and manage the consumer experience.
Are B-schools keeping up? Despite scattered courses in product design and development, most B-school curriculums still focus on analytical courses -- accounting, marketing, and finance. But today, companies increasingly need softer people skills: observing consumers, collaborating with teams, conceiving new brands, and, perhaps most important, working across cultures with Chinese, Germans, Indians, Italians, Russians, and a world full of suppliers and partners.
Unfortunately, many B-schools still appear to be graduating twenty- and thirtysomethings, many of whom believe they can manage by the numbers when more businesses are stressing the importance of organic growth through new products and services. Raising innovation success rates today is far more important than improving Six Sigma results.
In times of economic upheaval, when the speed of change is enormous, the business world often adapts faster than academia. The drop in B-school enrollments may be signaling that people think they will receive better training inside Corporate America than out. If that is true, B-schools have a lot more learning to do before they can successfully teach this generation of managers.